December 08, 2020
Gold firms as rising Covid 19 cases boost stimulus hopes
Gold prices hit a two-week high on Tuesday, as investors remained hopeful of further U.S. stimulus measures to counter the economic fallout of a surge in coronavirus cases.
Spot gold rose 0.2% to $1,867.66 per ounce . It rose to $1,869.06, its highest since Nov. 23, earlier in the session.
U.S. gold futures were up 0.3% at $1,871.70.
“Markets more or less are pricing in that a deal will get done ... It’s going to be about how large that package happens to be, how soon it comes and how that manifests in inflation expectations going forward,” said IG Markets analyst Kyle Rodda.
The U.S. Congress will vote this week on a stopgap funding bill to provide more time to reach a deal on Covid-19 relief and avert a government shutdown.
U.S. Senate Democratic leader Chuck Schumer said there were signs of progress in talks on a bipartisan bill.
Underscoring the need for stimulus, California on Monday imposed a raft of new Covid-19 restrictions, while New York weighed a ban on indoor dining as nationwide cases continue to soar.
Gold is seen as a hedge against inflation that could result from large stimulus.
Technically, gold remains in an overall bearish trend in the medium term, said Margaret Yang, a strategist at DailyFX.
Since the current stimulus package remains below market expectations, it may not drive prices further going forward, she said.
If gold fails to break a resistance at $1,870, there may be another pullback with support at $1,800, Yang said.
Silver rose 0.6% to $24.66 per ounce and platinum was steady at $1,021.03, while palladium gained 0.1% to $2,334.38.