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PRECIOUS-Gold hits one-week high on U.S. pandemic aid cheer

Published 28-12-2020, 09:37 am
© Reuters.
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(Updates prices)

* Silver hits 1-week peak

* Gold could sustain above $1,900/oz if dollar weakens - analyst

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa

By Nakul Iyer

Dec 28 (Reuters) - Gold prices rose as much as 1.3% on Monday as investors welcomed U.S. President Donald Trump's signing of a long-awaited pandemic aid bill, with a weaker dollar lending further support.

Spot gold XAU= gained 0.6% to $1,886.71 per ounce by 0741 GMT, after earlier hitting its highest since Dec. 21 at $1,900.04.

U.S. gold futures GCv1 were up by 0.4% at $1,889.90.

Trump on Sunday signed into law a $2.3 trillion pandemic aid and spending package, restoring unemployment benefits to millions of Americans and averting a partial federal government shutdown. now eye a U.S. House of Representatives vote on Monday to increase coronavirus relief checks to individuals from $600 to $2,000, with Trump saying the Senate "will start the process" to approve higher payments.

"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.

Gold is seen as a hedge against inflation likely to result from large stimulus measures

"We've been talking about this deal for a long time, so how much the market is going to follow through will be the big question," said Stephen Innes, chief global market strategist at financial services firm Axi.

To sustain itself above $1,900, gold will likely need the dollar to weaken further, he added.

The dollar .DXY was down 0.2% against rivals, lifting bullion's appeal for other currency holders. USD/ .

A daily close for the gold/silver ratio below 69.50 would be a bullish technical development for both metals, implying further meaningful gains lie ahead, OANDA's Halley said.

Silver XAG= was up 2% to $26.36 an ounce, after hitting a one-week peak of $26.75 earlier in the session. Platinum XPT= climbed 0.8% to $1,031.64 and palladium XPD= rose 0.3% to $2,356.18.

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