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Gold futures on Thursday were trading higher for a third day in a row, and headed for their highest level since the last week in November amid persistent weakness in the U.S. dollar and growing hope that an impasse among entrenched parties in Washington on another coronavirus relief deal will be broken.
U.S. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer issued a joint statement calling on a bipartisan effort to achieve another round of COVID-19 relief measures, on the back of a proposed $908 billion plan.
Doubts remain about progress being made to strike a pact before year-end, but investors are starting to bet that a deal, which would be bullish for gold, pointing to more government spending, can be achieved at some point.
Investments in gold have been viewed as a hedge against fiscal stimulus plans that have the potential to revive inflation and increase debt and devalue currencies.
The COVID financial relief talks come as the one-day total of deaths from the pandemic in the U.S. hit a record in the U.S. at 3,157 Wednesday, and newly reported infections were at their second-highest level, surpassing 200,000 for the second time in less than a week.
Against this backdrop, gold has achieved some newfound buoyancy after hitting a roughly five-month nadir earlier this week.
February gold GCG21, +0.50% headed $12.10, or 0.7%, higher to reach $1,842.30 an ounce, after seeing a 0.6% rise on Wednesday, to hit its highest settlement for a most-active contract since Nov. 23, FactSet data show.
Prices for the metal surged 2.1% on Tuesday and marked its biggest one-day climb in three weeks. Prices on Monday had touched their lowest settlement since July 1.
The recent moves for gold have also come as the U.S. dollar has weakened to a roughly three-year low, as measured by the ICE U.S. Dollar Index DXY, -0.41%, making the dollar-priced gold bullion more enticing to buyers using other currencies.
So far this week, gold has lost 1.1% and is down 3% in the past 30 days, FactSet data show.
Raffi Boyadjian, senior investment analyst at XM, said that dollar’s softening has helped gold recoup much of its recent lost ground, after the prospect of viable COVID-19 vaccines dulled the luster of the haven asset.
Gold has been “having a better day, benefiting from the dollar’s persistent weakness,” the XM analyst said. “Gold prices were on track for a third straight day of gains, recovering strongly from Monday’s 5-month low,” Boyadjian said.
Gold briefly lost some momentum after weekly joblessness data showed that Americans seeking claims for unemployment benefits fell to 712,000 in late November from 787,000.
Meanwhile, March silver SIH21, -0.39% added 12 cents, or 0.5%, to trade at $24.21 an ounce after slipping by less than 0.1% in the prior session.
