Gold edges up on softer US dollar, Fed stimulus bets
[BENGALURU] Gold edged higher on Monday, as a softer US dollar and hopes of further US monetary stimulus offset optimism over the quick rollout of a Covid-19 vaccine and bolstered the precious metal's appeal.
Spot gold rose 0.1 per cent to US$1,872.76 per ounce by 0327 GMT and US gold futures were little changed at US$1,871.80.
US Treasury Secretary Steven Mnuchin on Friday reassured markets that the Fed and Treasury had many tools left to support the economy, after deciding to de-fund several Federal Reserve lending programs by the end of the year.
"Ironically, failure to deliver a fiscal package is supportive for gold," said Michael McCarthy, chief strategist at CMC Markets, adding there might be more reliance on Fed support, which will take the form of liquidity and lower interest rates.
Non-yielding gold is often seen as a hedge against inflation that is likely to result from stimulus measures.
Novel coronavirus cases crossed 12 million over the weekend in the United States, while rising cases in Germany fuelled worries over an extended lockdown.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Also lending support to bullion was a softer US dollar that reduced the cost of purchasing it to other currency holders.
While interest rates are likely to remain low and the US dollar weaker next year, investors may be less inclined to chase prices higher and patiently wait for buying the dips opportunities, Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.
Meanwhile, a broad gauge of Asian shares touched record highs buoyed by vaccine hopes.
Though gold has found support near US$1,875, a technical level, there are downside risks from a potentially stronger US dollar that could push the metal down to US$1,800-US$1,790, CMC Markets' Mr McCarthy said.
Silver firmed 0.4 per cent to US$24.25 an ounce. Platinum rose 0.1 per cent to US$946.75, while palladium was up 0.4 per cent at US$2,334.23.
REUTERS
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Energy & Commodities
Glencore now sees FY trading division profit between US$3 billion-US$3.5 billion
Hong Kong team plants seeds to safeguard legacy grains
Gold holds steady as investors focus on US Fed meeting
Chevron CEO expects ExxonMobil arbitration resolved in coming months
Oil falls more than US$1/barrel on Middle East peace talks, US rate cut doubts
Diamond giant De Beers is in the shop window, but the potential buyers are few