Gold jumps on weaker dollar, stimulus bets

Gold rose by more than 1 per cent on Friday and was on course for a second straight weekly gain as the dollar weakened and renewed negotiations for US stimulus prompted investors to buy bullion as a hedge against inflation. Spot gold was up 1.2 per cent to $1,915.36 per ounce by 1135 GMT, up 0.9pc this week. U.S. gold futures gained 1.4pc to $1,921.30.

“The gyrations on whether we are going to get a stimulus or not seems to be affecting gold prices; gold has rallied on huge stimulus from the US Federal Reserve and the government, and if that continues, it will support gold further,” said Robin Bhar, an independent analyst. U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin resumed their talks over the coronavirus aid plan, after US President Donald Trump called off negotiations earlier this week. “Investors who have a portfolio in equities, fixed income, will also try to find ways of hedging the uncertainty on the economy and the stimulus,” Bhar added. Gold has gained 26pc this year, boosted by massive stimulus globally to cushion the pandemic’s economic impact.

The dollar fell against rivals, amid growing bets that Joe Biden would win the US presidential election and possibly offer more stimulus after that. The prospect of a Democrat win boosts the incentive to hold gold as a new relief package can be assembled if the ongoing stimulus talks fall apart, said OANDA analyst Craig Erlam. Meanwhile, gold-backed exchange traded funds added over 1,000 tonnes of bullion worth $60 billion to their stockpile in the first nine months of 2020, the World Gold Council said. Silver rose 2.3pc to $24.36 per ounce and is up more than 2pc this week. Platinum gained 2.2pc to $881.33 and palladium climbed 2.2pc to $2,423.30.