Gold rises as dollar weakens despite delayed US stimulus vote

[BENGALURU] Gold prices gained on Wednesday as the dollar weakened, with investors looking past a top US Republican leader's decision to postpone a Senate vote on increased pandemic relief payments.

Spot gold rose 0.2 per cent to US$1,881.62 per ounce by 5.48am GMT. US gold futures were up 0.2 per cent at US$1,886.20.

"A weaker dollar is enough to create a small upward momentum for confidence to be maintained in gold," said Michael Langford, director at corporate advisory AirGuide.

The dollar index hovered close to a more than two-year low, as traders shrugged off Republican Senate Majority Leader Mitch McConnell's decision to put off a vote on increasing Covid-19 relief checks to US$2,000.

Mr Langford said US$2,000 stimulus checks would most likely go through and that would be a positive for gold, adding that the metal needed an unexpected catalyst to see significant upside.

Gold is seen as a hedge against inflation and currency debasement likely to result from large stimulus measures unveiled to mitigate the impact of the pandemic.

"Gold could reclaim the US$2,000 handle in 2021, depending on the US inflation outlook. Further rounds of fiscal stimulus under the (Joe) Biden administration should translate into more upside," said FXTM market analyst Han Tan.

Investors now await Jan 5 Georgia runoff elections that would determine which political party will control the US Senate.

Meanwhile, coronavirus cases continued to soar globally, with the first case of a new infectious virus variant being detected in the United States.

"Exchange Traded Fund flows are set to have a major say on how gold performs over the course of 2021, with investors expected to wade further out into risk-on waters," Mr Tan said.

Among other precious metals, silver rose 0.5 per cent to US$26.31 an ounce, platinum gained 0.6 per cent to US$1,055.62 and palladium climbed 0.8 per cent to US$2,346.18.

REUTERS