Gold rose to more than one-week high on Thursday, as the dollar fell to multi-year lows on hopes of coronavirus vaccine roll-outs soon, while investors kept track of developments on a U.S. stimulus deal.
Spot gold rose 0.1% to $1,832.11 per ounce by 0640 GMT, having hit its highest since Nov. 24 at $1,837.01. U.S. gold futures were up 0.3% at $1,836.20.
Congressional Republicans and Democrats were unable to agree on a fresh coronavirus relief package, though early signs indicate that a $908 billion 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 will likely weaken the U.S. dollar, said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.
Optimism over a COVID-19 vaccine could have limited impact on bullion going forward as much of it is priced in by markets, he added.
Health experts in the United States welcomed Britain’s emergency approval of Pfizer Inc’s vaccine, in a sign that U.S. regulators may soon follow suit.
Hopes of a stimulus deal and vaccine progress pushed the U.S. dollar to a near 2-1/2-year low, making bullion cheaper to holder of other currencies.
Gold is undervalued given the weaker dollar and low-interest rates and should be trading in the 1900s, said Howie Lee, economist at OCBC Bank. It could rally in the near future, he added.
Lower interest rates lower the opportunity cost of holding non-yielding bullion.
Underscoring the hit to the economy from the pandemic, U.S. private payrolls showed fewer-than-expected jobs were added in November. Investors will now focus on weekly jobless claims due at 1330 GMT and non-manufacturing activity data at 1500 GMT.
Silver fell 0.7% to $23.94 an ounce , while platinum dropped 0.3% to $1,011.72 and palladium was little changed at $2,398.13.
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