(Updates prices)
* Gold hits highest since Nov. 23
* Dollar re-strengthening is downside risk for gold- analyst
* California imposes new COVID-19 restrictions
* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa
By Nakul Iyer
Dec 8 (Reuters) - Gold prices touched a two-week high on Tuesday as investors pinned hopes on a U.S. fiscal stimulus deal to cushion the economic blow from surging coronavirus infections.
Spot gold XAU= rose 0.1% to $1,864.74 per ounce by 0725 GMT, having touched its highest since Nov. 23 of $1,871.52 earlier in the session.
U.S. gold futures GCv1 were up 0.2% to $1,869.70.
"Markets more or less are pricing in that a deal will get done ... It's going to be about how large that package happens to be, how soon it comes and how that manifests in inflation expectations going forward," said IG Markets analyst Kyle Rodda.
Rodda, however, warned that a re-strengthening of the dollar likely to be caused by stalled U.S. stimulus talks or Brexit uncertainty posed a risk to gold prices.
The U.S. Congress will vote this week on a stopgap funding bill to provide more time to reach a deal on COVID-19 relief, while U.S. Senate Democratic leader Chuck Schumer said there were signs of progress in talks on a bipartisan bill. imposition of stricter lockdowns to control soaring infections has highlighted the need for more stimulus, with California announcing fresh restrictions on Monday and New York weighing a ban on indoor dining. size of the current U.S. stimulus package remains below market expectations so it may not drive gold prices further, said Margaret Yang, a strategist at DailyFX.
If gold fails to break a resistance at $1,870, there may be another pullback with support at $1,800, Yang said.
Gold is seen as a hedge against inflation that could result from a large stimulus.
Silver XAG= rose 0.1% to $24.53 per ounce and palladium XPD= gained 0.2% to $2,335.37, while platinum XPT= fell 0.2% to $1,019.54.