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Gold Jumps On US Stimulus Deal Cheer, Virus Lockdowns

Representative image

Representative image

Gold climbed to a sixweek high on Monday, driven by news that U.S. congressional leaders reached agreement on a COVID19 aid package, while lockdowns in the United Kingdom soured appetite for riskier assets and added to the metal's support.

Gold climbed to a six-week high on Monday, driven by news that U.S. congressional leaders reached agreement on a COVID-19 aid package, while lockdowns in the United Kingdom soured appetite for riskier assets and added to the metal’s support.

Spot gold rose 1.1% to $1,900.57 per ounce by 0512 GMT, having earlier hit its highest since Nov. 9 at $1,901.38. U.S. gold futures gained 0.9% to $1,904.80.

The $900 billion package, which would be the second-largest economic stimulus in U.S. history, comes as the pandemic accelerates, infecting more than 214,000 people in the country each day.

“Now that we’ve got fiscal stimulus behind us, gold has enough momentum to close above $1,900 by year-end and it could even climb up to $1,925,” said Stephen Innes, chief global market strategist at financial services firm Axi.

“If you coalesce the stimulus package with optimism for the Federal Reserve to cap longer-dated yields given it signalled a continuation to its bond buying programme last week, we could see gold remain supported on dips until at least March 2021”.

Aiding gold, stocks slipped as Britain’s health minister suggested tighter curbs in London and southeast England might stay for some time to counter a new coronavirus strain.

Gold has once again regained its safe-haven status as lockdowns have changed sentiment in the broader market, which looked past the pandemic and into a recovery next year instead, said Michael McCarthy, chief strategist at CMC Markets.

Speculators raised their bullish positions in COMEX gold and silver contracts in the week to Dec. 15, data showed on Friday.

Silver rose 4.5% to $26.93 an ounce, having hit its highest since Sept. 18 at $27.02 earlier in the session.

Platinum rose 0.9% to $1,045.40 and palladium gained 0.7% to $2,376.13.

first published:December 21, 2020, 11:30 IST
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