Gold prices inched higher on Wednesday after President Donald Trump’s threat not to sign the U.S. pandemic relief bill triggered a drop in the dollar.
Spot gold was up 0.1% at $1,860.81 per ounce by 1250 GMT, while U.S. gold futures fell 0.3% to $1,864.60 per ounce.
Bullion has climbed about 23% so far this year and is poised for its biggest annual gain since 2010 as central banks and governments globally unleashed unmatched stimulus to cushion the economic blow of the coronavirus crisis.
“Even if Donald Trump denies to sign the bill, it is widely expected that Biden will make it pass and therefore we do not see any downside to gold at the moment,” Natixis analyst Bernard Dahdah said.
Gold is seen as a hedge against inflation, caused by added monetary flow into the economy, and benefits from low-interest rates that reduce its opportunity cost.
The dollar index dropped 0.2% against rival currencies after Trump’s threat to not sign a coronavirus recovery bill [USD/], enhancing gold’s appeal to non-U.S. investors.
“The market is quite optimistic about the (U.S. stimulus) bill getting passed eventually,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.
“The real trigger for gold would be (a) prolonged easing of central bank balance sheets and a continued fall in (the) dollar,” Shah added.
A coronavirus mutation has prompted many nations to close their doors to Britain, denting hopes of a worldwide economic revival after the pandemic.
“On the upside, there is no real resistance until $1,900, although the area around $1,875-$1,880 is likely to be the first test for any recovery attempt (for gold),” ActivTrades’ chief analyst Carlo Alberto De Casa said in a note.
Silver rose 0.8% to $25.31 an ounce. Platinum gained 0.5% to $1,007.39 and palladium was up by 0.4% at$2,322.52.
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