SINGAPORE: Gold prices rose in Asian trade on Thursday as progress on a US fiscal stimulus deal weakened the dollar, with the metal drawing further support from a pledge by the Federal Reserve to keep interest rates low until a recovery is secured.
Spot gold climbed 0.4% to $1,872.20 per ounce by 0745 GMT, having hit a more than one-week high of $1,873.76 earlier in the session. US gold futures were up 0.9% at $1,875.50.
US lawmakers inching closer to agreement on a fiscal stimulus is supporting gold, though markets are likely to be disappointed by the size of the package and it is unlikely to reverse gold’s downward trend seen over the past few months, said DailyFx currency strategist Ilya Spivak.
US congressional negotiators haggled on Wednesday over the details of a $900 billion COVID-19 aid bill expected to include $600-$700 stimulus checks and extended unemployment benefits, pushing the dollar to a more than two-year trough.
The Fed more explicitly promised to continue its bond-buying programme until there is “substantial further progress” in restoring full employment and hitting its 2% inflation target.
“The market likely read into what the Fed was saying as a pre-commitment to continue quantitative easing and took support from that,” said Spivak, adding that the metal remained sensitive to the Fed’s less dovish stance on the volume and tenure of bond purchases.—Reuters