Gold steadies as prospects of huge US relief aid outweigh stronger dollar

Bengaluru — Gold prices steadied after dropping to their lowest in 1½ months on Monday, as prospects of a huge US coronavirus relief aid outweighed a stronger dollar and lifted bullion’s appeal as an inflation hedge.

Spot gold was steady at $1,826.79 per ounce by 5.49am, after having dropped to its lowest since December 2, 2020 at $1,809.90 earlier in the session. US gold futures eased 0.2% to $1,826.60.

“The gold market remains relatively supported at these levels, as the current run of the US dollar has more to do with safe haven, rather than a discernible pivot to a stronger dollar,” said Stephen Innes, chief global market strategist at Axi.

Earlier in the session, the US dollar held near a four-week peak against rival currencies, making gold expensive for holders of other currencies.

“The US stimulus [plan] is quite large, we’re going to get about 1.9-trillion or 1.5-trillion [dollar], and either scenario is good for gold,” Innes said.

US President-elect Joe Biden last week unveiled a $1.9-trillion stimulus package proposal to jump-start the economy and said he wants 100-million Covid-19 vaccine shots during his first 100 days in office.

Gold is considered a hedge against inflation and currency debasement, likely from large stimulus.

“The US dollar and yields may be the new safe havens rather than precious metals and would weigh on prices in the short term,” Phillip Futures said in a note.

“Our market view remain bullish for the long term as the US dollar is expected to remain structurally weak in the long term.”

Among other precious metals, silver rose 0.3% to $24.81 an ounce. Platinum rose 0.5% to $1,078.59, while palladium gained 0.1% to $2,385.29.