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NEW YORK: Gold jumped more than 1% on Monday as expectations of a large US economic stimulus package bolstered bullion’s appeal as an inflation hedge.

Spot gold rose 1.4% to $1,836.95 per ounce by 11:54 a.m. EST (1654 GMT). US gold futures rose 1.3% to $1,836.10.

US President Joe Biden and his Democratic allies in Congress cleared the path for a $1.9 trillion COVID-19 relief package as lawmakers approved a budget outline that will allow them to muscle the plan through without Republican support.

US Treasury Secretary Janet Yellen said on Sunday the country would get back to full employment next year if Congress approves the stimulus package.

“Yellen talking about full employment by 2022 with $2 trillion in stimulus is driving the likelihood of a surge in inflation, which is good for gold,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

Major US stock indexes rose to record highs on the boost to economic recovery bets.

The ‘inflation trade’ could supersede any negative impact the dollar might have on gold and silver, said Jim Wyckoff, senior analyst with Kitco Metals.

Gold also seemed to take some cues from another jump in Bitcoin, after Tesla Inc said it had invested around $1.5 billion in the cryptocurrency.

In its 2020 annual report, Tesla also said it may invest in “certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.”

But “Bitcoin and old have been basically uncorrelated. The current surge in Bitcoin may be adding to the sentiment, but is not a primary driver,” BMO’s Wong said.

An interest in asset classes that are a store of value such as gold and silver, after Tesla’s Bitcoin purchase, is helping prices, said David Meger, director of metals trading at High Ridge Futures.

Meanwhile, spot silver gained 2.4% to $27.48 an ounce and platinum rose 3.8% to $1,166.24, while palladium eased 0.1% to $2,334.25.

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