“You now have a leadership in the U.S. that is going to do everything possible to defeat the virus – that’s going to mean extended lockdowns, more stimulus and that is going to provide strong upward support for gold,” said Edward Moya, senior market analyst at OANDA. “Investors are bracing for a much stronger wave of stimulus once (President-elect Joe) Biden comes into office and I think that’s why the gold trade is in check.”
The dollar index fell 0.5% against rival currencies, making greenback-denominated bullion more appealing for other currency holders. Risk sentiment was also boosted by hopes of an enhanced U.S. COVID-19 relief package, with the U.S. Senate set to vote on $2,000 COVID-19 relief checks.
“We are entering 2021 with some nervousness as we got stock markets at elevated levels and (on) prospects of additional stimulus against the prospect of vaccine starting to improve the economic outlook… but overall it hasn’t reduced the appetite for safe-haven metals,” said Saxo Bank analyst Ole Hansen.
Meanwhile, Europe‘s COVID-19 vaccination drive helped prospects of global economic growth in 2021 despite an uneven start. As 2020 winds down, gold, a hedge against inflation and currency debasement, has risen about 24% this year, prompted by stimulus measures rolled out across the globe to curtail the economic damage from the pandemic. Silver was up 0.3% at $26.09 an ounce. Platinum rose 1.2% to $1,043.57 and palladium fell 0.2% to $2,318.64.