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PRECIOUS-Gold gains as surging COVID-19 cases fuel stimulus bets

Published 15/12/2020, 03:08 pm
© Reuters.
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(Adds comments, updates prices)

* Germany, Netherlands and London impose pandemic restrictions

* Dollar hovers near a two-and-a-half-year low

* Interactive graphic tracking global spread of coronavirus: open

* https://tmsnrt.rs/3aIRuz7 in an external browser

By Nakul Iyer

Dec 15 (Reuters) - Gold prices rose on Tuesday as surging COVID-19 cases and restrictions weighed on investors' appetite for traditionally riskier assets and boosted bets for further stimulus ahead of the Federal Reserve's policy meet.

Spot gold XAU= rose 0.7% to $1,839.20 per ounce by 0705 GMT, while U.S. gold futures GCv1 gained 0.6% to $1,843.80.

The pandemic continued to spread globally, prompting tighter restrictions in the Netherlands, Germany and London, while deaths crossed 300,000 in the United States, pushing Asian equities to a more than one-week trough. MKTS/GLOB

"The recent lockdowns mean that there is going to be more stimulus needed — whether from the (U.S) Congress or from the U.S. Federal Reserve," said Stephen Innes, chief global market strategist at financial services firm Axi.

U.S. lawmakers appeared optimistic over a fiscal coronavirus stimulus deal split into two parts in an attempt to win approval, pushing the U.S. dollar to languish near multi-year lows. USD/ also looked forward to policy meetings of the Fed starting on Tuesday and the Bank of England on Thursday.

"While the Fed is likely to be cautious about further easing given vaccine rollouts, they will likely signal more quantitative easing ahead which will be supportive to gold," Axi's Innes said.

Coronavirus vaccinations in the United States began on Monday with a New York City intensive care unit nurse becoming the first to receive the vaccine. Fed is looking to give the U.S. economy a tailwind by moving simultaneously on monetary policy with fiscal policy," said Jeffrey Halley, a senior market analyst at OANDA.

"Gold should find support from the Fed signalling an intention to cap yields ahead, even if they do not announce a formal move to."

Silver XAG= rose 1.4% to $24.14 an ounce, platinum XPT= added 0.2% to $1,009.50 and palladium XPD= gained 0.4% to $2,302.47.

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