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Markets

Gold firms on weaker dollar, US stimulus bets

  • Underscoring the economic hit from the pandemic, data on Wednesday showed elevated US jobless claims and a drop in consumer spending for the first time since May in November.
24 Dec, 2020

Gold prices gained on Thursday, supported by a weaker dollar as investors bet on further US stimulus following dour economic data even as President Donald Trump threatened to veto a long-awaited pandemic relief bill.

Spot gold rose 0.2% to $1,875.61 per ounce by 0316 GMT. US gold futures rose 0.2% to $1,881.20.

"Gold prices are riding a near-term bull trend, propelled by a weaker dollar and a new strain of coronavirus that could derail the recovery, hinting at further stimulus ahead," said Margaret Yang, a strategist at DailyFX.

News that Britain and the European Union appeared close to clinching a long-elusive trade deal on Wednesday lifted the Euro and British pound, pushing down the dollar.

Safe-haven gold has also benefited from the spread of a more contagious variant of the virus in Britain that has forced the country to impose sweeping restrictions.

The rising risks from the new virus variant and surging US infections have kept investors optimistic about the US stimulus bill despite Trump's threat to veto the $900 billion relief package.

Underscoring the economic hit from the pandemic, data on Wednesday showed elevated US jobless claims and a drop in consumer spending for the first time since May in November.

Gold is considered as a hedge against inflation and monetary debasement.

Gold prices will move in tandem with COVID-19 developments next year, while President-elect Joe Biden's policy on the dollar and Sino-US relations will also determine the metal's trajectory, DailyFX's Yang said.

Silver climbed 0.6% to $25.69 an ounce. Platinum gained 0.3% to $1,017.43 and palladium rose 0.4% to $2,333.60.

Most markets will be closed on Friday for Christmas.

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