Gold inched higher on Wednesday as the dollar eased, while investors weighed a top U.S. Republican leader’s decision to postpone a vote on increased pandemic relief payments.
Spot gold rose 0.3% to $1,883.88 per ounce by 0313 GMT. U.S. gold futures were up 0.2% at $1,887.40.
“A weaker dollar is enough to create a small upward momentum for confidence to be maintained in gold,” said Michael Langford, director at corporate advisory AirGuide.
Gaining a greater exposure to gold makes sense in a low-yield and weakening dollar environment, he added.
The dollar index fell 0.2%, hovering close to its lowest level in more than two years, as traders looked past Republican Senate Majority Leader Mitch McConnell’s decision to put off a vote on increasing Covid-19 relief checks to $2,000 from $600.
Gold is seen as a hedge against inflation and currency debasement likely to result from large stimulus measures rolled out this year to cushion the impact of the pandemic.
Investors now await Jan. 5 Georgia runoff elections that will determine which political party controls the U.S. Senate.
Under a Democrat-controlled Senate, fiscal policy is likely to stay loose, which will weigh on the dollar and be bullish for precious metals, Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.
Meanwhile, coronavirus cases continued to soar globally, with the first case of a new infectious virus variant being detected in the United States and new infections hitting a record high in Britain.
Among other precious metals, silver rose 0.7% to $26.37 an ounce, platinum climbed 1.4% to $1,064.50 and palladium gained 0.8% to $2,346.18.