Gold volatile as expected US stimulus stirs stocks

• Spot gold, which rose as much as 5pc on Tuesday was up 0.1pc to $1,611.73 per ounce at 1106 GMT.
• US gold futures fell 1pc to $1,644.20, while world stocks rebounded on expectations of a $2 trillion US fiscal stimulus package being approved.

Spot gold, which rose as much as 5pc on Tuesday was up 0.1pc to $1,611.73 per ounce at 1106 GMT.

It had earlier fallen 1pc after notching up a gain of 1pc.

US gold futures fell 1pc to $1,644.20, while world stocks rebounded on expectations of a $2 trillion US fiscal stimulus package being approved.

"The big downside risk (in gold) remains the potential for those sharp sell-offs in equity markets to be repeated, especially following yesterday's huge rally," OANDA analyst Craig Erlam said in a note.

Senate majority leader Mitch McConnell said the US package had been agreed upon and would be put to a vote on Wednesday.

"We still see a favourable backdrop for gold as the economic fallout from the corona crisis should strengthen safe-haven demand," Julius Baer analyst Carsten Menke said.

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.3pc on Tuesday.

Benchmark spot gold prices traded below US gold futures in a sign that the market is worried that air travel restrictions and refinery closures will hamper shipments of bullion to the United States to meet contractual requirements.

Among other metals, palladium rose 3.9pc to $2,007.33 per ounce, while platinum gained 0.5pc to $711.83.

Both climbed more than 10pc in the previous session after a lockdown in major producer South Africa. Silver fell 0.4pc to $14.22 per ounce.