Gold rose more than 1% to a two-week high on Monday on expectations of fresh fiscal stimulus in the U.S.and a subdued dollar.
Spot gold prices were 1.3% higher at $1,861.26 per ounce by 10:16 a.m. EST (1516 GMT), after rising to their highest since Nov. 23 at $1,863.26 earlier. U.S. gold futures rose 1.4% to $1,865.80.
“The stimulus plan has helped stabilize the gold market because more money being pumped into the financial system is inflationary,” said Kitco Metals senior analyst Jim Wyckoff.
With pressure mounting on the U.S. Congress to help people and businesses hit hard by the pandemic, talks aimed at providing relief gathered momentum and lawmakers worked to put the finishing touches on a new $908 billion bill. Bullion is considered a hedge against inflation that could result from the large stimulus measures unleashed in 2020, gaining 22% so far this year.
Also helping gold, the dollar index hovered near a 2-1/2-year low.
“This is a seasonally strong period for gold prices and we just went through a capitalization event, in which a lot of the weaker hands in gold have been shaken out of the market,” said Daniel Ghali, commodity strategist at TD Securities.
Gold has recovered more than 5% since slumping to a five-month low on Nov. 30, with November also marking bullion’s worst month in four years, pressured by hopes of a vaccine-fuelled economic recovery.
On the technical front, the breach of the $1,850 level, which was touted as an important resistance, signals further recoveries for gold, analysts said. Bullion also shook off pressure from earlier in the session on Britain’s plan to become the first country to roll out the Pfizer/BioNTech COVID-19 vaccine this week.
Platinum was 1.5% lower at $1,039 after falling as much as 4.8% earlier.
Silver rose 1.5% to $24.52 per ounce and palladium was down 0.2% at $2,338.50.