Gold prices hit a two-month high on Tuesday, lifted by a lacklustre dollar as investors awaited the U.S. Senate runoffs in Georgia that will determine which party controls Congress and prospects of additional fiscal stimulus.
Spot gold was up 0.1% to $1,944.91 per ounce, after hitting its highest since Nov. 9 at $1,947.96. U.S. gold futures edged 0.2% up to $1,950.10.
“Much will depend on the outcome of the runoff elections in the state of Georgia in the U.S. and there are certainly hopes among market participants that the Democrats are to win both seats in the elections,” Commerzbank analyst Daniel Briesemann said.
“This would mean that the newly elected U.S. president Biden can pursue his announced expansionary fiscal policy, which would benefit gold.”
The dual runoff elections in Georgia will decide which party controls the U.S. Senate and influence future fiscal policies. A Democratic victory in both could tip control of the Senate away from Republicans.
Underpinning gold, Britain went into a new national lockdown to contain a surge in COVID-19 cases, while New York registered its first case of the more contagious variant of the coronavirus found in the UK.
The dollar index hovered close to April 2018 lows, making bullion cheaper. In other metals, silver rose 0.7% to $27.40 and palladium gained 0.8% to $2,392.23.
Platinum was up 0.2% to $1,071.62, having hit a more than four-year high of $1,127.82 on Monday.
Platinum and palladium are used by automakers in catalytic converter manufacturing to clean car exhaust fumes.
“If you are looking at the PMIs released yesterday, they have been positive for the manufacturing sector. So we get indications that there is a strong demand from the automotive sector,” said Quantitative Commodity Research analyst Peter Fertig.
Demand for automotives would increase the need for catalytic converters and hence the Platinum Group Metals (PGMs), he added.