PRECIOUS-Gold gains over 1% as focus turns to Biden administration

PRECIOUS-Gold gains over 1% as focus turns to Biden administration

Reuters  | Jan 21, 2021 03:20

PRECIOUS-Gold gains over 1% as focus turns to Biden administration

* Gold at $2,000/oz still achievable, economist says
* Interactive graphic tracking global spread of coronavirus:
https://tmsnrt.rs/3mvcUoa

(Adds comments, updates prices)
By K. Sathya Narayanan
Jan 20 (Reuters) - Gold rose more than 1% on Wednesday on
expectations that U.S. President Joe Biden's administration
would increase stimulus measures to deal with the economic
fallout of the coronavirus pandemic.
Spot gold XAU= was up 1.6% to $1,868.00 per ounce by 1:56
p.m. EST (1856 GMT), having touched more than a one-week high
earlier. U.S. gold futures GCv1 settled up 1.4% at $1,866.50.
"Whether the feelings of comity will last the afternoon
remain in question as Biden's first acts will be to reverse some
of his predecessor's policies. Gold has had a very good day and
a close here or even near $1,860 opens the door for $1,900,"
said Tai Wong, head of base and precious metals derivatives
trading at BMO.
"The most market-relevant indicator for gold markets will be
the reception that the 1.9 trillion USD stimulus bill will get
on Capitol Hill, especially in the Senate and whether it will
encounter a fair tailwind or stormy seas."
Biden was sworn into office on Wednesday, with investors
focused on his $1.9 trillion stimulus package proposal and the
pace of COVID-19 vaccine distribution. Gold is considered a hedge against inflation that can result
from stimulus measures.
Comments by Janet Yellen, Biden's nominee to head the
Treasury Department, underscoring the need for stimulus also
supported the metal, said Bob Haberkorn, senior market
strategist at RJO Future.
Yellen, a former chair of the Federal Reserve, on Tuesday
urged U.S. lawmakers to "act big" on relief spending and said
pandemic relief would take priority over tax increases.
Gold can still reach $2,000, probably by the middle of the
second quarter when a good amount of people get inoculated and
there's so much cash in the system with demand almost coming
back to normal, said Howie Lee, an economist at OCBC Bank.
"People will start looking at inflation very closely then,"
Lee added.
Silver XAG= rose 2.2% to $25.75 an ounce, platinum XPT=
climbed 2.3% to $1,108.05, while palladium XPD= rose 1.1% to
$2,378.37.

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