Bengaluru — Gold prices jumped 1% on Monday as investors cheered news that US President Donald Trump signed into law a long-awaited pandemic aid bill, with a weaker dollar lending further support.
Spot gold was up 1% at $1,894.44 an ounce by 3.44am GMT, after hitting a one-week high of $1,900.04 earlier in the day. US gold futures gained 0.9% to $1,899.10.
Trump on Sunday signed into law a $2.3-trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a partial federal government shutdown.
“Markets are rallying on the stimulus bill,” said Stephen Innes, chief global market strategist at financial services firm Axi. “But we’ve been talking about this deal for a long time, so how much the market is going to follow through will be the big question.”
The dollar was down 0.2% against rivals, lifting bullion’s appeal for other currency holders. Investors are keeping a close eye on a vote in the US House of Representatives on Monday to increase coronavirus relief cheques to individuals from $600 to $2,000, with Trump saying the Senate “will start the process” to approve higher payments.
While gold could move above $1,900 an ounce, it is likely to need the dollar to weaken further to sustain itself above the level, Innes said.
Gold, seen as a hedge against inflation, has gained more than 24% this year, largely driven by a raft of stimulus measures to mitigate the impact of the pandemic.
Silver was up 2.8% at $26.56 an ounce, after hitting a one-week high of $26.75 earlier in the session. Platinum climbed 1.2% to $1,036.22 and palladium was up 0.5% at $2,360.79.