Gold climbed to a six-week high on Monday, driven by news that US 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 0.9 per cent to $1,896.56 per ounce by 0745 GMT, having earlier hit its highest since Nov. 9 at $1,906.46. US gold futures gained 0.8 per cent to $1,904.20.
The $900 billion U.S stimulus deal reached on Sunday 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 climb up to $1,925,” said Stephen Innes, chief global market strategist at financial services firm Axi, adding that dovish Fed policies signalled last week were also supportive.
The Fed last week vowed to keep funnelling cash into financial markets and keep rates low until a US economic recovery is secure.
Aiding gold, Asian 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.
Silver rose 4.4 per cent to $26.91 an ounce, having hit its highest since Sept. 16 at $27.38 earlier in the session.
“Silver’s industrial demand is ‘bulletproof’ from the lockdowns as export markets remain open and demand could get another boost from (US) President-elect Joe Biden’s push towards clean energy,” Axi’s Innes said.
Biden’s policies to fight climate change are supportive for silver, which is used in solar panels.
Platinum rose 0.1 per cent to $1,036.87 and palladium fell 0.3 per cent to $2,353.50.