Gold rises as dollar sags on vaccine rollout hopes

Bengaluru — Gold rose to an over one-week high on Thursday as the dollar weakened on hopes of coronavirus vaccine rollouts, while investors also weighed the possibility of more US stimulus.

Spot gold rose 0.2% to $1,835.37/oz by 4.02am GMT. US gold futures were up 0.5% at $1,838.60. Optimism over a stimulus deal and vaccine progress favoured riskier assets and pushed the US dollar to a near two-and-a-half-year low.

Congressional Republicans and Democrats were unable to agree on a fresh coronavirus relief package, though early signs indicate that a $908bn bipartisan proposal could be gaining traction as a negotiating tool.

Stimulus talks, especially over a bipartisan agreement, will support gold in the short term as it would weaken the US dollar, said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide. Positivity over a Covid-19 vaccine could have limited effect on bullion going forward as much of that optimism is priced in by markets, he added.

Health experts in the US welcomed Britain’s emergency approval of Pfize’s vaccine, in a sign that US regulators may soon follow suit.

“The key drivers of gold, real interest rates and the dollar, are expected to remain soft without concrete economic progress worldwide or an effective vaccine readily available to the masses,” Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.

Gold is seen as a hedge against inflation likely to result from large stimulus measures. Silver fell 0.3% to $24.02/oz, while platinum dropped 0.3% to $1,011.47 and palladium was up 0.2% at $2,404.18.

Reuters