Gold hits over one-week low as dollar gains ground

Gold prices fell to an over one-week low on Monday, as the dollar firmed and talks about the new US coronavirus aid package showed no signs of progress.

Spot gold fell 0.1% to $1,898.28 per ounce by 0347 GMT, after hitting $1,890.19, its lowest since Oct. 15. US gold futures were down 0.3% at $1,899.30. "In the near-term, there seems to be a lack of impetus to find extra buyers (for gold)... A lot of it is because we're trading in the looming shadow of the US elections and stimulus speculation," said IG Markets analyst Kyle Rodda.

The dollar index was up 0.2% against a basket of currencies.

US House Speaker Nancy Pelosi on Sunday said the Trump administration was reviewing the latest plan for more Covid-19 relief and that she expected a response on Monday.

With the November presidential elections fast approaching, analysts say a victory for Democrat rival Joe Biden could help gold rally on the back of a potential large stimulus package. "It is unlikely we may see much (gold) price volatility before next week's US Presidential voting," OCBC said in a note. "We expect prices to continue trading close to the $1,900/oz level this week."

Rising Covid-19 cases in the United States are underpinning the need for more stimulus. According to a Reuters tally, hospitalizations are rising and have hit a two-month high.

France registered record increase in infections over the weekend and Spain announced a state of emergency as a second wave of cases surges through Europe.

Widely viewed as a hedge against inflation and currency debasement, bullion has gained 25% this year as central banks and governments globally unveiled unprecedented stimulus measures to cushion the economic fallout from the pandemic. Elsewhere, silver dipped 1.1% to $24.32 per ounce. Platinum fell 1.4% to $889.30 and palladium was down 0.7% to $2,375.54.