Gold holds near one-week high as US stimulus bets dent dollar
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[BENGALURU] Gold held firm near a one-week high on Thursday as progress on a US fiscal stimulus deal weighed on the dollar, while a pledge by the Federal Reserve (Fed) to keep rates low until an economic recovery is secure lent further support.
Spot gold was little changed at US$1,863.89 per ounce by 3.42am GMT, having hit a one-week high of US$1,867.19 earlier in the session. US gold futures rose 0.5 per cent to US$1,868.20.
US lawmakers inching closer to agreement on a fiscal stimulus is supporting gold but markets are likely to be disappointed by the package size and it is unlikely to reverse gold's downward trend seen over the past few months, said DailyFx currency strategist Ilya Spivak.
US congressional negotiators haggled on Wednesday over details of a US$900 billion Covid-19 aid bill that is expected to include US$600-US$700 stimulus checks and extended unemployment benefits, causing the dollar to languish near a more than two-year trough.
"The market likely read into what the Fed was saying as a pre-commitment to continue quantitative easing and took support from that," said Mr Spivak, adding that the metal remained sensitive to the Fed's less dovish stance on bond purchases.
With interest rates likely to stay near zero for years to come, the Fed on Wednesday more explicitly promised to continue its bond-buying programme until there is "substantial further progress" in restoring full employment and hitting its 2 per cent inflation target.
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Investors now await the Bank of England's policy decision, due at 12pm GMT, where it is expected to refrain from further stimulus ahead of a possible no-deal Brexit.
"Brexit will sketch the course for gold in the coming days and once that happens we will see funds flowing back to (gold) exchange traded funds again," said Brian Lan, managing director at GoldSilver Central.
Silver fell 0.4 per cent to US$25.25 an ounce. Platinum rose 0.3 per cent to US$1,036.94 and palladium gained 0.1 per cent to US$2,329.30.
REUTERS
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