Gold climbed on Monday as a softer dollar and optimism over a new U.S. stimulus agreement before next month's presidential election lifted demand for bullion as an inflation hedge.

Spot gold was up 0.7pc at $1,911.41 per ounce by 1037 GMT. U.S. gold futures rose 0.5pc to $1,915.30.

The dollar slipped 0.2pc versus rivals, making gold less expensive for holders of other currencies.

"The continued focus on the potential for a stimulus package being agreed to and introduced before the Nov. 3 election is continuing to impact gold," said Saxo Bank analyst Ole Hansen.

"It seems like both parties are still, at least on paper, in discussion and keeping the door open for a deal to be reached... That's probably the key source of inspiration to a market that I would say in general has gone a bit stale."

U.S. House Speaker Nancy Pelosi said on Sunday that differences remained with the Trump administration on a wide-ranging relief package but that she was optimistic legislation could be pushed through before Election Day.

Gold, which has gained over 26pc so far this year, tends to benefit from stimulus spending because it's considered a hedge against inflation risks and currency debasement.

"We expect gold to trade cautiously around $1,900 level for now, the game changer being whether we can get (U.S) fiscal stimulus in the next 48 hours," said Howie Lee, economist at OCBC Bank.

Concerns around fresh coronavirus-led restrictions in Europe and elsewhere also bolstered gold's safe-haven appeal.

Elsewhere, silver climbed 2.4pc to $24.76, having hit a near one-week peak.

Citi in a note said it expects silver to rally to $40 over the next 12 months, on sustained investor demand and a recovery in industrial consumption in 2021.

Platinum gained 1.5pc to $872.97 per ounce and palladium rose 0.8pc to $2,349.73.