Gold heads for weekly gain on muted dollar, U.S. stimulus bets

Gold prices steadied in a tight range on Friday and were set for their first weekly gain in four as the dollar weakened on expectations of additional U.S. stimulus.

Spot gold was little changed at $1,838.44 per ounce by 1131 GMT, and has added about 3pc so far this week. U.S. gold futures were up 0.1pc at $1,842.50.

"The market is now expecting higher world GDP growth in 2021, especially with the rolling out of the vaccine, which will create a risk-on environment," said Bank of China International analyst Xiao Fu.

"But on the other hand, U.S. dollar weakness and a mix of fiscal and monetary policy, as well as geopolitical risks, are underpinning gold. So you have those two forces coming at the same time."

Unprecedented stimulus packages released this year have pushed gold 21pc higher, given its appeal as a hedge against likely inflation and currency debasement as a result of the stimulus.

The U.S. dollar was on course for its worst week since early November, making gold cheaper for holders of other currencies.

A bipartisan, $908 billion coronavirus aid plan gained momentum in the U.S. Congress on Thursday.

But expectations of a vaccine rollout added to overall optimism for an economic rebound, keeping stock markets near record highs.

Among other metals, platinum gained 2.4pc to $1,054.45 per ounce and palladium rose 1.5pc to $2,336.35.

"Platinum is attracting renewed interest as a global push for cleaner energy and waning demand for gold promise to lift demand for the metal," Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.

Platinum is used by automakers for catalytic-converter manufacturing to clean vehicle-exhaust fumes.

Silver was up 0.3pc at $24.14 an ounce and was set to climb more than 6pc for the week.