Gold edged higher on Tuesday as the dollar weakened and hopes for a U.S. coronavirus aid package ahead of the presidential election boosted bullion’s appeal as an inflation hedge.
Spot gold rose 0.4% to $1,912.71 per ounce. U.S. gold futures settled up 0.2% at $1,915.40.
“Gold markets are in a wait-and-see mode in regards to the stimulus plan. It would appear that Republicans and Democrats are still at odds over certain topics within the language,” said David Meger, director of metals trading at High Ridge Futures. “However, the market still holds out some hope that some type of stimulus plan could get done … (Stimulus) is clearly the most important factor for the market in the short term.”
U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin “continued to narrow their differences” on the stimulus package, Pelosi’s spokesman Drew Hammill said.
Gold, considered a hedge against inflation and currency debasement, has risen nearly 26% this year amid unprecedented global levels of stimulus during the pandemic.
The dollar index slipped 0.4% against its rivals to its lowest since Sept. 21, making gold less expensive for holders of other currencies.
“In the last few days, there hasn’t been much volatility on bullion as investors are awaiting new market drivers,” ActivTrades’ chief analyst, Carlo Alberto De Casa, said in a note. “Only a clear climb above $1,930 would give new strength to the price,” he said, adding that while the bull trend seems to have paused, “it is definitely not yet dead”.
Investors are now waiting for the final debate between U.S. President Donald Trump and his Democratic challenger Joe Biden on Thursday.
Among other precious metals, silver rose 0.8% to $24.69 an ounce, platinum jumped 1.9% to $872.60 and palladium gained 1.8% to $2,385.12.