Gold began the new year by climbing nearly 2% on Monday, closing in on a near two-month peak, as the dollar slid to 2018 lows and prospects of tougher restrictions to combat a new variant of the coronavirus kept safe-haven bullion in demand.
Spot gold was up 1.7% to $1,930.65 per ounce at 1023 GMT, having hit its highest since Nov. 9 at $1,934.81. U.S. gold futures climbed 2.2% to $1,936.30.
“Since gold reversed course from below $1,900, this is mainly a reflection of a weaker U.S. dollar … a very fertile backdrop for gold and based on that we’ve also seen some trend followers and technical traders coming back into the market extending this rally,” said Julius Baer analyst Carsten Menke.
Although potentially stricter curbs in Britain and Japan have not dampened risk appetite, bullion still remains supported by the clampdowns, Menke added. [.EU]
The dollar index tumbled to a two and a half year low, making gold cheaper for other currency holders. [USD/]
Investors are on the lookout for Tuesday’s runoff elections in the U.S. state of Georgia that will decide the control of the Senate.
“The chances of the Democrats winning both seats have increased of late. This would make it easier for the newly elected U.S. President Biden to push through his planned expansionary fiscal policy,” Commerzbank said in a note.
Non-yielding bullion is seen as a hedge against the inflation that is likely to result from record fiscal stimulus.
Silver gained 3.3% to $27.24 an ounce, touching a two-week high since Dec. 21.
Analysts say silver’s dual role as a safe-haven asset and an industrial metal, along with its greater volatility, may mean it could fare better than gold as U.S. President-elect Joe Biden’s push into clean energy prompts more usage.
Platinum rose 2.6% to $1,096.27, after hitting its highest since September 2016 at $1,106.65, while palladium fell 1.5% to $2,411.44.
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