Gold jumps to six-week high on US stimulus deal cheer, virus lockdowns

BENGALURU (REUTERS) - Gold climbed to a six-week high on Monday (Dec 21), 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 1.1 per cent to US$1,900.57 per ounce by 0512 GMT, having earlier hit its highest since Nov 9 at US$1,901.38.

US gold futures gained 0.9 per cent to US$1,904.80. The US$900 billion package, which would be the second-largest economic stimulus in US history, 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 even climb up to US$1,925," said Mr Stephen Innes, chief global market strategist at financial services firm Axi.

"If you coalesce the stimulus package with optimism for the Federal Reserve to cap longer-dated yields given it signalled a continuation to its bond buying programme last week, we could see gold remain supported on dips until at least March 2021."

Aiding gold, stocks slipped as Britain's health minister suggested tighter curbs in London and south-east 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 Mr Michael McCarthy, chief strategist at CMC Markets.

Speculators raised their bullish positions in Comex gold and silver contracts in the week to Dec 15, data showed last Friday. Silver rose 4.5 per cent to US$26.93 an ounce, having hit its highest since Sept 18 at US$27.02 earlier in the session. Platinum rose 0.9 per cent to US$1,045.40 and palladium gained 0.7 per cent to US$2,376.13.