Gold prices edged up on Tuesday, helped by a softer dollar, as investors eyed a U.S. Senate vote on increased pandemic aid, although the gains were capped by higher Asian stocks.
Spot gold rose 0.4% to $1,877.66 per ounce by 0658 GMT. The metal had climbed as much 1.3% on Monday after the passage of a near $900 billion U.S. stimulus package.
U.S. gold futures were little changed at $1,880.90.
“While a weaker dollar has supported gold, the metal is going to have a hard time finding a supportive narrative given much of the good news like U.S. stimulus (deal)…looks priced in while a resurgent pandemic may drive haven dollar buying,” said DailyFX currency strategist Ilya Spivak.
“Gold could come under more pressure as the Fed has little room to ease further and there is potential for at least a discussion about tapering quantitative easing if the recovery outlook improves next year.”
The dollar fell 0.2% against rivals, while Asian equities firmed with Japanese stocks hitting a 30-year high buoyed by optimism ahead of Tuesday’s U.S. Senate vote on $2,000 COVID-19 relief checks.
Gold, seen as a hedge against inflation, has gained more than 23% this year, largely driven by a raft of stimulus measures unleashed to mitigate the impact of the pandemic.
Broader markets will run with the economic recovery story next year but expansionary fiscal and loose monetary policy will keep gold prices pinned near current levels, said Hitesh Jain, lead analyst at Mumbai-based Yes Securities.
The metal should trade in a range of $1,850-$2,000 in the next 3-6 months, he said.
Silver fell 0.3% to $26.07 an ounce. Platinum rose 0.5% to $1,036.60 and palladium climbed 1.6% to $2,361.68.
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