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28 Dec, 2020 12:31

Gold hits one-week peak as dollar tumbles after Trump signs stimulus

Gold hits one-week peak as dollar tumbles after Trump signs stimulus

The price of gold grew by as much as 1.3 percent on Monday, as the US dollar slipped following President Donald Trump’s signing of a long-awaited $900 billion coronavirus stimulus package.

The yellow metal was trading at $1,876.10 per ounce as of 11:38am GMT, after earlier hitting its highest since December 21 mark of $1,900.04. Bullion is set to post the first monthly gain since July. Over the whole of 2020, gold has benefited from a steady weakening of the US currency since it peaked in March, as well as from unprecedented fiscal and monetary stimulus.

“The only thing that is helping gold at the moment is because the dollar is lower and yields are not so much higher,” ABN Amro analyst Georgette Boele told Reuters, adding that “we have holiday season and there’s no liquidity.”

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Meanwhile, the dollar index was down 0.3 percent against rivals, slipping to a one-week low and lifting bullion’s appeal for other currency holders. “Even without extra stimulus, gold could climb higher... Trump’s signature [on the stimulus bill] was the last major risk point to the bull market,” said Jeffrey Halley, a senior market analyst at OANDA.

According to the analysts, gold is seen as a hedge against the inflation likely to result from large stimulus measures.

“Gold prices found support just below $1,800 per ounce earlier and it moved below the 200-day moving average and now it’s above again – so that gives a bit more optimism on the outlook for at least the start of 2021,” said Boele.

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