Gold rises 1% on weaker dollar, US stimulus cheer

Gold prices rose more than 1% on Monday, recovering from a more than eight-month low touched in the previous session, as the dollar weakened and the United States passed a massive $1.9 trillion stimulus package.

Spot gold was up 1% at $1,750.24 per ounce by 0544 GMT, after rising as much as 1.1% earlier in the session.

US gold futures rose 1.1% to $1,748.50.

Gold prices tumbled 3% on Friday, posting their biggest monthly drop since November 2016 in February, due to a spike in US bond yields.

"A reversal of the higher yield trend and a weaker dollar are allowing gold to move a little bit higher," said Stephen Innes, chief global market strategist at financial services firm Axi, adding that the US stimulus was also underpinning bullion prices further.

US President Joe Biden scored his first legislative win as the House of Representatives passed his $1.9 trillion coronavirus relief package early Saturday.

The dollar slipped from a one-week high hit in the previous session, raising gold's appeal for holders of other currencies.

Gold is considered a hedge against inflation, likely to result from widespread stimulus, while higher bond yields challenge that status.

On the technical front, the psychological $1,700 level is very significant, while the $1,760-$1,765 range is an important hurdle for gold to rise further, Innes said.

Meanwhile, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.6% on Friday to the lowest since May 2020.

Speculators cut their bullish positions in COMEX gold and silver contracts in the week to Feb. 23, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Silver rose 0.8% to $26.84 an ounce, while palladium climbed 1.2% to $2,344.76. Platinum gained 2.6% to $1,219.