Gold hits one-week peak as U.S. stimulus hopes dent dollar

Gold prices rose to a one-week high on Wednesday as the dollar weakened on renewed hopes for a new U.S. stimulus package ahead of next month’s election.

Spot gold was up 0.5% at $1,915.66 per ounce, after hitting its highest since Oct. 13. U.S. gold futures rose 0.2% to $1,919.20 per ounce.

“There seems to be increasing hope that a stimulus deal can get through Congress before election day … This is broadly keeping risk appetite supported in the U.S., dragging on the dollar and lifting gold prices,” OANDA analyst Craig Erlam said.

The dollar index fell to a one-month low against its rivals, making gold less expensive for holders of other currencies.

The White House and Democrats in the U.S. Congress moved closer to agreement on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his Republican Party. The comments from Trump also lifted equities.

Gold, considered a hedge against inflation, currency debasement and uncertainty, has gained more than 26% this year, driven mainly by unprecedented levels of global stimulus to cushion economies from the pandemic-induced slump.

“There however appears no definite clarity on the continued shifting of positions on the stimulus relief bill which shorter-term traders can price into the precious metals market,” Phillip Futures analysts said in a note. “Long term investors have shifted focused on what the November election outcome means for stimulus later, with a Democrat victory seen boosting gold’s sentiment with a very large stimulus package.”

Elsewhere, silver rose 1.1% to $24.92 per ounce, platinum edged 0.1% higher to $871.46 and palladium gained 0.1% at $2,401.44.