Gold gains on softer dollar; US Senate pandemic aid vote eyed

[BENGALURU] Gold inched higher on Tuesday as a softer dollar underpinned the metal, with market participants looking forward to a US Senate vote on increased pandemic aid.

Spot gold rose 0.4 per cent to US$1,877.96 per ounce by 3.14am GMT, after closing slightly lower in the previous session. The metal had climbed as much 1.3 per cent on Monday after the passage of a near US$900 billion US stimulus package.

US gold futures fell 0.1 per cent to US$1,879.40.

Against a basket of currencies, the dollar fell 0.2 per cent, bolstering gold's appeal to other currency holders.

"While a weaker dollar has supported gold, the metal is going to have a hard time finding a supportive narrative given much of the good news - passing US stimulus, a Brexit deal - looks priced in while a resurgent pandemic may drive haven dollar buying," said DailyFX currency strategist Ilya Spivak.

"Gold could come under more pressure as the Fed has little room to ease further and there is potential for at least a discussion about tapering quantitative easing if the recovery outlook improves next year."

Investors now await the US Senate vote on President Donald Trump's demand for US$2,000 Covid-19 relief checks after it was passed by the House of Representatives.

Gold, seen as a hedge against inflation, has gained more than 23 per cent this year, largely driven by a raft of stimulus measures unleashed to mitigate the impact of the pandemic.

Hedge funds and money managers raised bullish positions in Comex gold and silver contracts in the week to Dec 21, the US Commodity Futures Trading Commission said on Monday.

Silver rose 0.5 per cent to US$26.28 an ounce. Platinum climbed 0.8 per cent to US$1,039.66 and palladium was up 1.5 per cent at US$2,359.18.

REUTERS