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PRECIOUS-Gold gains on U.S. stimulus deal optimism, weaker dollar

Published 21/10/2020, 03:11 pm
© Reuters.
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* Spot gold hits one-week peak at $1,920.27/oz

* Dollar hits one-month trough

* Interactive graphic tracking global spread of coronavirus: open

* https://tmsnrt.rs/3aIRuz7 in an external browser (Adds comments, updates prices)

By Eileen Soreng

Oct 21 (Reuters) - Gold prices rose on Wednesday as optimism that U.S. lawmakers could reach agreement on a pre-election coronavirus relief package pressured the dollar and bolstered the precious metal's appeal as an inflation hedge.

Spot gold XAU= gained 0.6% to $1,917.76 per ounce by 0323 GMT, having earlier hit a one-week high. U.S. gold futures GCv1 were up 0.4% at $1,922.80.

The White House and Democrats in the U.S. Congress moved closer to agreement on a fresh stimulus package on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his Republican Party. will continue on Wednesday, an aide to top U.S. Democrat Nancy Pelosi said.

The news lifted risk appetite and sent the dollar index .DXY to a one-month low against a basket of major currencies. USD/

"The falling U.S. dollar is the main contributor to gold's rise," said Margaret Yang, a strategist with DailyFx, which covers currency, commodity and index trading.

The pandemic has prompted unprecedented money printing and low-interest rates globally, putting gold on track for its best year in a decade given its appeal as a hedge against inflation and currency debasement.

But the precious metal has been rangebound in the past few sessions, hovering near the psychologically important level of $1,900, as investors await developments on the U.S. stimulus deal.

The market needs more certainty on the U.S. stimulus front before taking a position, IG Markets analyst Kyle Rodda said.

On the physical front, customs data showed Switzerland's gold exports to China and India dwindled in September, with the country instead importing record volumes of bullion from Hong Kong and sending the metal to Britain. silver XAG= rose 1.4% to $24.98 per ounce, platinum XPT= was up 0.8% at $877.91. Palladium XPD= was 0.4% higher at $2,407.95.

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