Gold rallies to 6-week high on US stimulus deal & Covid lockdowns

The price of gold continued to rise on Monday, after the US Congress reached a long-sought coronavirus aid package agreement. Lockdowns in the UK have also boosted investor appetite towards the precious metal.

Gold rose more than one percent to $1,900.57 per ounce, having earlier hit its highest level since November 9 at $1,901.38. US gold futures were also up to $1,904.80.

“Now that we’ve got fiscal stimulus behind us, gold has enough momentum to close above $1,900 by year-end and it could even climb up to $1,925,” Stephen Innes, chief global market strategist at financial services firm Axi, told Reuters.

“If you coalesce the stimulus package with optimism for the Federal Reserve to cap longer-dated yields given it signaled a continuation to its bond buying program last week, we could see gold remain supported on dips until at least March 2021,” he added.

The $900 billion stimulus package, that would send immediate aid to Americans and businesses to help them cope with the economic devastation of the pandemic and fund the distribution of vaccines, was finally agreed by US congressional leaders on Sunday. It will be the second-largest economic stimulus in US history. 

Analysts point out to renewed lockdowns in Europe, and particularly in the United Kingdom, as another reason for gold price growth. According to Michael McCarthy, chief strategist at CMC Markets, gold has once again regained its safe-haven status as lockdowns have changed sentiment in the broader market, which looked past the pandemic and into a recovery next year instead.

Statistics showed that speculators raised their bullish positions in COMEX gold and silver contracts in the week to December 15. Silver and platinum prices have been also on the rise lately, with silver having hit its highest peak since September 18.

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