Gold started the new year by climbing 2 percent on Monday, closing in on its peak in nearly two months as the dollar NSE -2.78 percent slipped to 2018 lows and higher restrictions to fight a new strain of the coronavirus were expected to keep safe-haven bullion in demand.
At $1,930.20 an ounce by 1255 GMT, spot gold rose 1.7 percent, having risen as much as 2 percent to its highest since Nov. 9. This is largely a result of a weaker U.S. dollar.
After gold reversed course from below $1,900, We have also seen some trend followers and technical traders returning to the market, expanding this rally,” said Julius Baer analyst Carsten Menke, “a very fertile backdrop for gold. While potentially tougher curbs have not decreased risk appetite in Britain and Japan, bullion remains supported by the clampdowns, added Menke.
The dollar index fell to a 2-1/2 year low, making other currency holders’ gold cheaper.
Investors are waiting in the U.S. state of Georgia for the run-off election on Tuesday, which will determine which party dominates the Senate.
Late on, the Democrats’ chances of winning both seats have improved. For the newly elected United States, this will make it easier. Commerzbank said in a note that President Biden would force through his proposed expansionary fiscal policy.
non-yielding bullion is seen as an inflation hedge that is likely to be the product of record fiscal stimulus.
In South Africa, the latest coronavirus strain is likely to have an effect on the prices of precious metals, said StoneX analyst Rhona O’Connell.
Though the ban on flights of south Africa will affect the exports of some precious metals like gold, platinum, and palladium.
Silver rose 3.1 percent to $27.16 an ounce in other precious metals, hitting its highest since Dec. 21, while palladium fell by 0.1 percent to $2,446.24.
After reaching its highest since August 2016 at $1,110., Platinum jumped 3.2 percent to $1,102.43.