Gold prices rose to its highest in nearly a week on Tuesday as the dollar weakened and hopes rose for additional fiscal stimulus for the American economy, ahead of the first U.S. presidential debate.
Spot gold gained 0.9% to $1,896.96 per ounce at 1:58 p.m. EDT (1758 GMT), while U.S. gold futures settled up 1.1% at $1,903.20.
“As we see better prospects for stimulus, we understand there is a tendency to weaken the domestic currency, in this case weaken the dollar and support gold and silver,” said David Meger, director of metals trading at High Ridge Futures.
At this point, U.S. Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi “slowly coming to terms over the second stimulus plan is obviously a supportive environment,” he added.
Pelosi said on Tuesday she hoped to have a coronavirus aid deal with the White House this week, after speaking with Mnuchin.
This comes after Pelosi on Monday said Democratic lawmakers unveiled a new $2.2 trillion coronavirus relief bill.
Gold prices, seen as a hedge against inflation and currency depreciation, has gained 25% so far this year, supported by monetary stimulus from major central banks and governments.
Helping bullion, the dollar was down 0.4% against a basket of other major currencies as markets waited for the first presidential debate between President Donald Trump and Democratic rival, Joe Biden at 9 p.m. ET (0100 GMT).
“The tide may be shifting slightly back to gold’s favor,” James Steel, chief precious metals analyst at HSBC said in a note.
“As the focus of the market shifts more decisively to the U.S. elections and the uncertainty that this election cycle brings, it looks like gold and silver have been given a reprieve from last week’s heavy liquidation.”
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