Gold firms as dollar slides to multi-year low

Gold prices edged higher on Wednesday, as the prospect of increased fiscal aid pushed the dollar to its lowest in more than two years, although global COVID-19 vaccine rollouts and increased risk appetite limited bullion's gains.

Spot gold rose 0.3% to $1,883.41 per ounce by 09:53 a.m. EST (1453 GMT). US gold futures were up 0.2% to $1,887.40.

"The US dollar index touched a new low - that's working in favour of the gold and silver market," said Kitco Metals senior analyst Jim Wyckoff.

"However, upbeat risk appetite in the market place, evident by stock indexes at or near record highs is tempering buying enthusiasm. You've got this tug and pull at work right now."

The dollar index touched a low since April 2018 following US Senate Majority Leader Mitch McConnell's decision to delay a vote on increasing COVID-19 relief checks to $2,000.

US stocks rose on hopes of additional fiscal stimulus and on optimism over vaccine rollouts, as Britain became the first country to approve a vaccine developed by AstraZeneca and Oxford University.

"The bigger picture is that gold is still holding up incredibly well at these price levels and the fiscal and monetary stimulus will still be there in 2021 as the pandemic is hitting hard in the US, Europe," said Bank of China International analyst Xiao Fu.

Investors await the Jan. 5 Georgia runoff elections that will determine which political party will control the US Senate, with expectations for more stimulus under a Democrat-controlled Senate and House.

Gold is seen as a hedge against inflation and currency debasement likely to result from large stimulus measures.

Among other precious metals, silver was up 0.5% to $26.30 an ounce, platinum gained 1.6% to $1,066.45 and palladium climbed 2.1% to $2,376.75.