Gold hits two-month peak as investors brace for US Senate runoffs

Gold prices hit a two-month high on Tuesday, lifted by a lacklustre dollar as investors awaited the US Senate runoffs in Georgia that will determine which party controls Congress and prospects for additional fiscal stimulus.

Spot gold was up 0.3% at $1,948.80 an ounce by 1234 GMT, having touched its highest since Nov. 9 at $1,950.34. US gold futures gained 0.3% to $1,952.20.

"Much will depend on the outcome of the runoff elections in the state of Georgia in the US and there are certainly hopes among market participants that the Democrats are to win both seats in the elections," said Commerzbank analyst Daniel Briesemann.

"This would mean that the newly elected US president Biden can pursue his announced expansionary fiscal policy, which would benefit gold."

A Democratic victory in Georgia could tip control of the Senate away from Republicans.

Underpinning gold, Britain went into a new national lockdown to contain a surge in COVID-19 cases while New York registered its first case of the more contagious coronavirus variant found in the UK.

The dollar index hovered close to April 2018 lows. A weaker dollar makes bullion cheaper for buyers using other currencies.

In other precious metals, silver rose 0.6% to $27.38 and palladium gained 2.1% to $2,423.78.

Platinum was up 0.6% at $1,076.86, having hit a more than four-year high of $1,127.82 on Monday.

Platinum and palladium are used by automakers in catalytic converter manufacturing to clean car exhaust fumes.

"If you are looking at the PMIs released yesterday, they have been positive for the manufacturing sector. So we get indications that there is a strong demand from the automotive sector," said Quantitative Commodity Research analyst Peter Fertig, adding that this would increase the need for catalytic converters and platinum group metals.