Gold prices steadied on Monday as fears of a new coronavirus strain roiled markets and investors opted for the dollar, while the metal gained some support from a U.S. stimulus package.

Spot gold was little changed at $1,881.39 per ounce by 12:09 p.m. EST (1709 GMT), having earlier hit its highest since Nov. 9 at $1,906.46. U.S. gold futures fell 0.2pc to $1,885.50.

"Gold market traders in general are looking at the Senate in the U.S. and it is a foregone conclusion that this stimulus deal that went through last night is going to pass this afternoon," said Bob Haberkorn, senior market strategist at RJO Futures.

"Gold will trade higher as the week goes on, but today I think traders are getting their heads around the UK strain."

Bullion had jumped more than 1pc earlier in the session, helped by reports that U.S. congressional leaders reached agreement on a $900 billion package.

But it later fell as much as 1.3pc as the dollar index rebounded off multi-year lows to a more than one-week high as fears of a highly infectious new coronavirus strain dragged the pound and euro down.

News of the strain also dented risk sentiment, leading to a slump in European equities and Wall Street's main indexes.

Gold, considered a hedge against inflation, has risen over 24pc this year amid the massive stimulus unleashed globally.

"Today's price action for gold reminded traders of the panic selling that occurred in March. The prospects of more stimulus have been driving gold higher, but today's short-term dollar surge is disrupting that thesis," Edward Moya, senior market analyst at OANDA said in a note.

"Gold's bullish trend is still intact but could still be vulnerable if the dollar comeback lasts a couple of days."

In other metals, silver was up 2pc at $26.28 an ounce, having hit its highest since Sept. 16 at $27.38 earlier in the session.

Palladium fell 2.4pc to $2,304.66 and platinum dipped 2.8pc to $1,007.29.