Gold slips from three-week high as dollar ticks up

Gold slipped from a three-week peak on Monday as the dollar recovered some ground, but a prospect of more U.S. coronavirus relief spending and uncertainty surrounding next month's U.S. presidential election put a floor under prices.

Spot gold was down 0.5pc at $1,920.51 per ounce by 0920 GMT, after hitting its highest since Sept. 21 at $1,932.96 earlier in the session.

U.S. gold futures were steady at $1,926.40.

"We've seen a bit of a modest dollar rebound," said Michael Hewson, chief market analyst at CMC Markets UK.

"I'm still very much in the opinion that we need to buy in the dip, so ultimately, the prospect of further stimulus post the U.S. election is helping support gold prices," he added.

The dollar index rose 0.1pc, crawling away from a three-week low touched in the previous session.

A stronger dollar tends to weigh on gold by making it more expensive for holders of other currencies.

Gold, which has gained over 27pc so far this year, tends to benefit from stimulus spending because it is considered a hedge against inflation risks and currency weakening. It is also in demand at times of heightened market uncertainty.

The Trump administration on Sunday called on Congress to pass a stripped-down coronavirus relief bill using leftover funds, as negotiations on a broader package stalled ahead of the Nov. 3 presidential election.

"We are in a wait-and-see scenario, as investors try to understand what is going to happen in early November with the U.S. election and the subsequent reaction of both stocks and currency markets," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

"Technically gold is regaining strength with the consolidation above $1,920 a supportive signal for bullion and confirming traders' huge interest."

Elsewhere, silver slipped 0.4pc to $25.03 per ounce, platinum fell 0.6pc to $880.50 and palladium eased 0.2pc to $2,434.52.