Gold firms as rising Covid-19 cases boost stimulus hopes

[BENGALURU] Gold prices hit a two-week high on Tuesday, as investors remained hopeful of further US stimulus measures to counter the economic fallout of a surge in coronavirus cases.

Spot gold rose 0.2 per cent to US$1,867.66 per ounce by 3.14am GMT. It rose to US$1,869.06, its highest since Nov 23, earlier in the session.

US gold futures were up 0.3 per cent at US$1,871.70.

"Markets more or less are pricing in that a deal will get done... It's going to be about how large that package happens to be, how soon it comes and how that manifests in inflation expectations going forward," said IG Markets analyst Kyle Rodda.

The US Congress will vote this week on a stopgap funding bill to provide more time to reach a deal on Covid-19 relief and avert a government shutdown.

US Senate Democratic leader Chuck Schumer said there were signs of progress in talks on a bipartisan bill.

Underscoring the need for stimulus, California on Monday imposed a raft of new Covid-19 restrictions, while New York weighed a ban on indoor dining as nationwide cases continue to soar.

Gold is seen as a hedge against inflation that could result from large stimulus.

Technically, gold remains in an overall bearish trend in the medium term, said Margaret Yang, a strategist at DailyFX.

Since the current stimulus package remains below market expectations, it may not drive prices further going forward, she said.

If gold fails to break a resistance at US$1,870, there may be another pullback with support at US$1,800, Ms Yang said.

Silver rose 0.6 per cent to US$24.66 per ounce and platinum was steady at US$1,021.03, while palladium gained 0.1 per cent to US$2,334.38.

REUTERS