Reuters | Jan 21, 2021 20:40
* Dollar index at near one-week low
* ECB monetary policy decision due at 1245 GMT
* Interactive graphic tracking global spread of coronavirus:
By Asha Sistla
Jan 21 (Reuters) - Gold prices hovered near a two-week high
on Thursday as the dollar slipped, with investors awaiting the
passage of U.S. President Joe Biden's proposed $1.9 trillion
dollar stimulus package.
Spot gold XAU= was little changed at $1,871.19 per ounce
by 1222 GMT, after hitting its highest since Jan. 8 at $1,874.86
earlier in the day. Bullion had gained 1.7% on Wednesday.
U.S. gold futures GCv1 rose 0.2% to $1,870.40.
"Basically what we've got at the moment is (gold) still
consolidating. The tailwinds are the economic stimulus in the
States and weakening of the dollar," said StoneX analyst Rhona
O'Connell added that it remained to be seen whether the
stimulus would go through both houses of Congress as quickly as
Biden's expectations and "that's probably one of the reasons why
gold hasn't been going huge".
Biden's top priority remains the $1.9 trillion stimulus plan
to revive a pandemic-hit economy, but it will require approval
from a divided Congress, where Democrats hold slim advantages in
both the House and Senate. Gold is considered a hedge against inflation that can result
from stimulus measures. However, higher yields have challenged
that status recently as they increase the opportunity cost of
holding non-yielding bullion.
The dollar .DXY slipped to a near one-week low and
benchmark 10-year U.S. Treasury yields remained steady after
Biden's inauguration and following a speech by his nominee for
Treasury Secretary Janet Yellen. USD/ US/ However, with all the stimulus talk bound to boost inflation
expectations, "in that scenario, the Federal Reserve will look
to hold back on policy support and probably start thinking about
unwinding current policy measures, which will boost the dollar
and undermine the value of gold," said DailyFX currency
strategist Ilya Spivak.
Investors await the European Central Bank monetary policy
decision due at 1245 GMT. Silver XAG= was up 0.3% to $25.89 an ounce. Platinum
XPT= gained 1.6% to $1,127, while palladium XPD= rose 0.7%
Biden looks to galvanize COVID-19 fight, vaccinations as he
takes office announces return to global climate accord, new curbs on
U.S. oil industry ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Written By: Reuters
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