Gold rose on Wednesday as optimism that U.S. lawmakers could reach an agreement on a pre-election coronavirus relief package weakened the dollar and bolstered bullion’s appeal as a hedge against inflation.
Spot gold gained 0.6% at $1,918.56 per ounce by 0742 GMT, after hitting a one-week high earlier in the session. U.S. gold futures were up 0.4% at $1,922.10 per ounce.
The White House and Democrats in the U.S. Congress moved closer to agreement on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his Republican Party.
The news lifted appetite for equities and sent the dollar index to a one-month low, bolstering gold’s appeal to other currency holders.
“The falling U.S. dollar is the main contributor to gold’s rally ... Gold may eventually complete this consolidation period and trend upwards,” said Margaret Yang, a strategist with DailyFx, which covers currency, commodity and index trading.
“A very accommodative monetary and fiscal policy environment, low interest rates and uncertainties surrounding the virus and presidential elections” could push prices to $2,000 and above by end-2020, Yang added.
{{/usCountry}}“A very accommodative monetary and fiscal policy environment, low interest rates and uncertainties surrounding the virus and presidential elections” could push prices to $2,000 and above by end-2020, Yang added.
{{/usCountry}}Gold has been range-bound near the psychologically important $1,900 level in the past few sessions, as investors tracked developments on the U.S. stimulus.
Prices have gained more than 26% this year, helped by near-zero interest rates globally and unprecedented stimulus to ease the economic blow from a worsening pandemic.
The market needs more certainty on the stimulus front before taking a position, IG Markets analyst Kyle Rodda said.
Gold may test a resistance at $1,935 per ounce, a break above which could open the way towards $1,967, according to Reuters technical analyst Wang Tao.
Elsewhere, silver rose 1.4% to $24.99 per ounce, platinum was up 0.7% at $877.25 and palladium gained 0.4% at $2,409.00.