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PRECIOUS-Gold gains as dollar weakens ahead of U.S. Senate stimulus vote

Published 29/12/2020, 02:47 pm
©  Reuters
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(Updates prices)

* Gold could struggle for near-term support - analyst

* Dollar index eases 0.2%, Japanese stocks scale 30-year peak

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

By Nakul Iyer

Dec 29 (Reuters) - Gold prices edged up on Tuesday, helped by a softer dollar, as investors eyed a U.S. Senate vote on increased pandemic aid, although the gains were capped by higher Asian stocks.

Spot gold XAU= was up 0.6% at $1,882.11 per ounce by 0819 GMT. The metal climbed as much 1.3% on Monday after U.S. President Donald Trump's approval of a $2.3 trillion stimulus package, including nearly $900 billion in COVID-19 aid.

U.S. gold futures GCv1 rose 0.3% to $1,885.70.

"While a weaker dollar has supported gold, the metal is going to have a hard time finding a supportive narrative given much of the good news like U.S. stimulus (deal)... looks priced in, while a resurgent pandemic may drive haven dollar buying," said DailyFX currency strategist Ilya Spivak.

"Gold could come under more pressure, as the Fed has little room to ease further and there is potential for at least a discussion about tapering quantitative easing if the recovery outlook improves next year."

The dollar .DXY fell 0.3% against rivals, while Asian equities firmed, with Japanese stocks hitting a 30-year high buoyed by optimism ahead of Tuesday's U.S. Senate vote on $2,000 COVID-19 relief checks. MKTS/GLOB

Gold, seen as a hedge against inflation, has gained more than 23% this year, largely driven by a raft of stimulus measures unleashed to mitigate the impact of the pandemic.

Broader markets will run with the economic recovery story next year but expansionary fiscal and loose monetary policy will keep gold prices pinned near current levels, said Hitesh Jain, lead analyst at Mumbai-based Yes Securities.

The metal should trade in a range between $1,850-$2,000 in the next three to six months, he said.

Silver XAG= rose 0.3% to $26.25 an ounce. Platinum XPT= increased 0.8% to $1,039.07 and palladium XPD= climbed 1.7% to $2,364.05.

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