NEW YORK: Gold rose to a two-week high on Tuesday, buoyed by growing expectations of more US fiscal stimulus to combat the economic impact of rising coronavirus cases, while a muted dollar added further support. Spot gold gained 0.3% to $1,868.97 per ounce by 11:55 am EST (1655 GMT). Earlier, it touched its highest since Nov. 23 of $1,875.07.
US gold futures were up 0.4% at $1,873.50.
"We are not too far away from the highs, and once we start getting stimulus or a clearer picture of how this is all going to play out, gold and silver will continue to move higher," said Daniel Pavilonis, senior market strategist at RJO Futures.
Raising gold's appeal for other currency holders, the dollar index stalled its slide, but was still close to multi-year lows. Amid mounting coronavirus cases, the US Congress will vote this week on a one-week stopgap funding bill to provide lawmakers more time to reach a deal on Covid-19 relief.
"Further fiscal spending is positive for gold, and the market appears to be anticipating some type of fiscal package passage, even if only temporary," James Steel, chief precious metals analyst at HSBC, said in a note.
But while a broadly defensive dollar, negative real rates and a "merciless rise in Covid-19 cases" are positive for gold and silver, "more good news on the vaccine front would be a powerful negative."
Gold, considered a hedge against inflation and currency debasement, has risen more than 23% this year, benefiting from near-zero interest rates and the risk of higher inflation likely to result from massive stimulus globally. Meanwhile, Britain began its vaccination against Covid-19 on Tuesday. Silver rose 0.1% to $24.54 per ounce, while palladium fell 0.7% to $2,316.10 and platinum was up 0.3% at $1,024.52.
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