December 23, 2020
Gold gains as weaker dollar offsets U.S stimulus doubts
(Reuters) - Gold prices ticked higher on Wednesday as weakness in the dollar offset worries about a U.S. stimulus deal after President Donald Trump threatened not to sign the pandemic relief bill.
Spot gold rose 0.3% to $1,865.01 per ounce, while U.S. gold futures were steady at $1,869.80.
The U.S. dollar edged down 0.1% against a basket of currencies, increasing gold's appeal among holders of other units.
Since the market has priced in a lot of pandemic-related uncertainty and the U.S. fiscal stimulus deal, gold will likely tread water in the coming weeks and any potential upside will come from new unknown uncertainties, said Michael Langford, director at corporate advisory AirGuide.
"The next move for fund managers is probably to de-risk ...
I think we'll see greater flows towards gold exchange-traded funds as they take some risk off the table," Langford said.
Raising concerns over a global economic recovery, a fast-spreading new coronavirus strain found in Britain has forced several countries around the world to shut their borders to the United Kingdom and drugmakers to scramble to test their COVID-19 vaccines against it.
Gold has climbed 22.9% so far this year on the back of large stimulus measures to aid pandemic-ravaged economies, as it is seen as a hedge against inflation likely to result from such stimulus and benefits from low-interest rates that reduce its opportunity cost.
Gold will recover its historical relationship with real yields, and real yields will likely continue to fall so there is no reason to think gold cannot make another push for $2,000 next year if this trend prevails, said IG Market analyst Kyle Rodda.
Silver rose 0.8% to $25.31 an ounce. Platinum rose 0.1% to $1,002.86 and palladium gained 0.2% to $2,318.23.