Gold hits 8-week high on worries over more coronavirus curbs

Gold prices started the new year on a high by notching an eight-week peak on Monday, as spiking Covid-19 cases and prospects of tougher restrictions boosted the safe-haven metal's appeal.

Spot gold rose 1.1% to $1,919.11 per ounce by 0553 GMT, having hit its highest since November 9 at $1,925.05, while US gold futures climbed 1.6% to $1,925. Doubts about a swift global economic rebound arose after a business survey showed the pace of expansion in China's industrial sector slowed in December.

Data for the United States and Europe is due later in the day. Potential for weaker data as Covid-19 ravages livelihoods in the United States and Europe is supporting gold, said Dominic Schnider, head of commodities and APAC forex at UBS Wealth Management in Hong Kong. The dollar eased, making gold cheaper for other unitholders.

Gold prices received a boost after Britain's prime minister hinted at stricter curbs, while Japan said it would consider declaring a state of emergency in its capital city area. Investors are also eyeing Tuesday's runoff elections in the US state of Georgia that will decide the control of the Senate.

"Gold will go higher if the Democrats win the Senate, basis freedom to engage in more adventurous fiscal policy," said Nicholas Frappell, global general manager at ABC Bullion. The supporting factors from 2020 will continue to push gold higher in the first half of the year, while the success of vaccine programs will also determine prices, he added.

Other commodities including oil, iron ore, and copper also kicked off 2021 on a strong note as vaccine rollouts and further fiscal support hopes spurred demand and boosted prices. Minutes from the US Federal Reserve's latest meeting are due on Wednesday. Silver gained 2.2% to $26.93 an ounce. Platinum rose 1.4% to $1,083.42 and palladium climbed 0.1% at $2,451.78.