Gold prices edged higher on Wednesday, bolstered by a weaker dollar, while investors kept hopes pinned on a US stimulus package, even after President Donald Trump threatened to not sign the relief bill.
Spot gold was up 0.7% at $1,872.67 per ounce by 12:55 p.m. EST, having risen as much as 1% earlier in the day. Meanwhile, US gold futures rose 0.4% to $1,877.50 per ounce in New York.
“The economic data just cements the belief that the economy is slowing down and that should help the negotiations with stimulus … it’s going to be extremely likely that some type of stimulus deal will still get done,” Edward Moya, senior market analyst at OANDA, told Reuters.
“The slightly weaker dollar has provided a move higher for gold,” Moya continued, adding the stimulus deal and positive developments on the Brexit front are needed to further cement gold’s bullish case.
Raising gold’s allure for holders of other currencies, the dollar index dropped 0.5%, as investors expect further declines in 2021.
Earlier, President Trump threatened to not sign the $892 billion coronavirus relief bill, seen as a lifeline for the nation’s pandemic-battered economy, saying the amount in the stimulus checks should be increased.
“Even if Donald Trump declines to sign the bill, it is widely expected that Biden will make it pass and therefore we do not see any downside to gold at the moment,” Natixis analyst Bernard Dahdah said.
The number of Americans filing first-time claims for unemployment benefits remained elevated, but posted an unexpected fall last week.
Bullion, considered a hedge against inflation and currency debasement, has risen more than 23% this year, benefiting from massive stimulus unleashed globally.