PRECIOUS-Gold hits two-month peak as investors brace for U.S. Senate runoffs

  • Reuters
  • Commodities News
PRECIOUS-Gold hits two-month peak as investors brace for U.S. Senate runoffs
Credit: © Reuters.

* Dollar index holds close to 2-1/2 year low

* England enters new national lockdown

* Platinum, palladium demand from auto sector to improve -analyst

* Interactive graphic tracking global spread of coronavirus: (Updates prices)

By Asha Sistla

Jan 5 (Reuters) - Gold prices hit a two-month high on Tuesday, lifted by a lacklustre dollar as investors awaited the U.S. Senate runoffs in Georgia that will determine which party controls Congress and prospects for additional fiscal stimulus.

Spot gold XAU= was up 0.3% at $1,948.80 an ounce by 1234 GMT, having touched its highest since Nov. 9 at $1,950.34. U.S. gold futures GCv1 gained 0.3% to $1,952.20.

"Much will depend on the outcome of the runoff elections in the state of Georgia in the U.S. and there are certainly hopes among market participants that the Democrats are to win both seats in the elections," said Commerzbank (DE: CBKG ) analyst Daniel Briesemann.

"This would mean that the newly elected U.S. president Biden can pursue his announced expansionary fiscal policy, which would benefit gold."

A Democratic victory in Georgia could tip control of the Senate away from Republicans. gold, Britain went into a new national lockdown to contain a surge in COVID-19 cases while New York registered its first case of the more contagious coronavirus variant found in the UK. dollar index .DXY hovered close to April 2018 lows. A weaker dollar makes bullion cheaper for buyers using other currencies. USD/

In other precious metals, silver XAG= rose 0.6% to $27.38 and palladium XPD= gained 2.1% to $2,423.78.

Platinum XPT= was up 0.6% at $1,076.86, having hit a more than four-year high of $1,127.82 on Monday.

Platinum and palladium are used by automakers in catalytic converter manufacturing to clean car exhaust fumes.

"If you are looking at the PMIs released yesterday, they have been positive for the manufacturing sector. So we get indications that there is a strong demand from the automotive sector," said Quantitative Commodity Research analyst Peter Fertig, adding that this would increase the need for catalytic converters and platinum group metals.

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