- Gold is seen as a hedge against inflation and currency debasement likely to result from large stimulus measures.
Gold edged higher on Friday as the dollar hovered near a two-and-a-half-year low, helping offset concerns over delays in a US pandemic rescue package.
Spot gold rose 0.1% to $1,836.27 per ounce by 0323 GMT. US gold futures gained 0.2% to $1,840.30.
"The correlation between gold and dollar has returned because markets have more or less priced in the vaccine optimism," said Margaret Yang, a strategist at DailyFX.
Gold needs a very strong catalyst to break its descending trend and that could be in form of a dovish Federal Reserve, a larger than expected US fiscal stimulus bill or the unlikely failure of vaccines, she added.
The dollar index was down 0.2% and traded close to 90.5, its lowest since April 2018, making gold cheaper for other currency holders.
Meanwhile, data on Thursday showed US weekly jobless claims jumped to a near three-month high, further evidence that rising COVID-19 infections and lack of additional fiscal stimulus were hurting the economy.
Capping bullion's gains, however, a top Democrat suggested talks over COVID-19 stimulus package could drag on through Christmas. The US Senate will likely vote on a stopgap measure to keep the government running on Friday.
Gold is seen as a hedge against inflation and currency debasement likely to result from large stimulus measures.
The European Central Bank rolled out more stimulus measures on Thursday to lift the currency bloc's economy out of a double-dip recession.
Gold prices will remain elevated in 2021 due to accommodative rates and a weaker dollar, Fitch Solutions said in a note, adding that the improved economic outlook has reduced the possibility of significant upside.
Palladium was up 0.1% at $2,333.24. Platinum fell 0.1% to $1,025.99 and was set to decline 2.7% this week.