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By Nakul Iyer
Dec 17 (Reuters) - Gold prices scaled a fresh one-week peak
on Thursday as progress on a U.S. fiscal stimulus deal weighed
on the dollar, while a pledge by the Federal Reserve to keep
rates low until an economic recovery is secure lent further
support.
Spot gold rose 0.3% to $1,869.36 per ounce by 0600
GMT, having hit a one-week high of $1,870.11 earlier in the
session. U.S. gold futures were up 0.7% at $1,871.60.
U.S. lawmakers inching closer to agreement on a fiscal
stimulus is supporting gold, though markets are likely to be
disappointed by the fiscal package size and it is unlikely to
reverse gold's downward trend seen over the past few months,
said DailyFx currency strategist Ilya Spivak.
U.S. congressional negotiators haggled on Wednesday over
details of a $900 billion COVID-19 aid bill that is expected to
include $600-$700 stimulus checks and extended unemployment
benefits, pushing the dollar to a more than two-year trough.
"The market likely read into what the Fed was saying as a
pre-commitment to continue quantitative easing and took support
from that," said Spivak, adding that the metal remained
sensitive to the Fed's less dovish stance on the volume and
tenure of bond purchases.
The Fed on Wednesday more explicitly promised to continue
its bond-buying programme until there is "substantial further
progress" in restoring full employment and hitting its 2%
inflation target.
Inflation will now be expected to do the heavy-lifting to
push the dollar lower and break-evens higher, which would send
gold vectoring higher, said Stephen Innes, chief global market
strategist at financial services firm Axi in a note.
Investors now await the Bank of England's policy decision,
due at 1200 GMT, where it is expected to refrain from further
stimulus.
Silver rose 0.4% to $25.44 an ounce. Platinum
gained 0.8% to $1,042.53 and palladium was up 0.6% at
$2,339.70.
(Reporting by Nakul Iyer in Bengaluru; Editing by Subhranshu
Sahu and Sherry Jacob-Phillips)
.Source
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