Gold holds near 1-week high as US stimulus bets dent dollar

US congressional negotiators haggled over details of a $900 billion Covid-19 aid bill on Wednesday
Last Updated : 17 December 2020, 08:35 IST

Follow Us :


Gold held firm near a one-week high on Thursday as progress on a US fiscal stimulus deal weighed on the dollar, while a pledge by the Federal Reserve to keep rates low until an economic recovery is secure lent further support.

Spot gold was little changed at $1,863.89 per ounce by 0342 GMT, having hit a one-week high of $1,867.19 earlier in the session. US gold futures rose 0.5 per cent to $1,868.20. US lawmakers inching closer to an agreement on a fiscal stimulus is supporting gold but markets are likely to be disappointed by the package size and it is unlikely to reverse gold's downward trend seen over the past few months, said DailyFx currency strategist Ilya Spivak.

US congressional negotiators haggled on Wednesday over details of a $900 billion Covid-19 aid bill that is expected to include $600-$700 stimulus checks and extended unemployment benefits, causing the dollar to languish near a more than a two-year trough.

"The market likely read into what the Fed was saying as a pre-commitment to continue quantitative easing and took support from that," said Spivak, adding that the metal remained sensitive to the Fed's less dovish stance on bond purchases.

With interest rates likely to stay near zero for years to come, the Fed on Wednesday more explicitly promised to continue its bond-buying program until there is "substantial further progress" in restoring full employment and hitting its 2 per cent inflation target.

Investors now await the Bank of England's policy decision, due at 1200 GMT, where it is expected to refrain from further stimulus ahead of a possible no-deal Brexit.

"Brexit will sketch the course for gold in the coming days and once that happens we will see funds flowing back to (gold) exchange-traded funds again," said Brian Lan, managing director at GoldSilver Central. Silver fell 0.4 per cent to $25.25 an ounce. Platinum rose 0.3 per cent to $1,036.94 and palladium gained 0.1 per cent to $2,329.30.

Published 17 December 2020, 06:18 IST

Follow us on :

Follow Us