Gold bars are pictured after being inspected and polished at ABC Refinery in Sydney on August 5, 2020.
DAVID GRAY | AFP | Getty Images
Gold rebounded to a month-and-a-half high on Thursday as growing prospects of a Joe Biden victory in a tight US election boosted hopes for a larger stimulus and dented the dollar.
Spot gold jumped 2.3% to $ 1,947.16 an ounce, after hitting its highest level since September 21 at $ 1,952.41. US gold futures gained 2.9% to $ 1,951.80.
“It seems it’s increasingly clear that we’re going to have a Democratic president next year,” said Michael Matousek, chief negotiator at US Global Investors, adding that this will ensure bigger stimulus packages and weigh heavily. on the dollar.
Global stocks surged, as the dollar fell to its lowest level in two weeks as Biden prepared to take the White House following wins in Michigan and Wisconsin.
Biden is expected to pass larger stimulus measures than US President Donald Trump, although investors are wary of a divided Congress could thwart Biden’s fiscal policy.
Gold is seen as a hedge against inflation and currency depreciation, which will likely result from a strong stimulus.
The Federal Reserve kept short-term borrowing rates close to zero in a decision Thursday that characterized the economy as growing but not close to where it was before the coronavirus pandemic hit.
“We’re going to hear the verbiage from the Fed crying for a further stimulus package,” said David Meger, director of metals trading at High Ridge Futures. Traders also took stock of lawsuits brought by Trump’s campaign in Michigan and Pennsylvania to stop the vote count.
“Beyond the US election, the broader macroeconomic backdrop remains favorable for rising gold prices given our expectations of further dollar weakness, with real rates remaining negative and other stimulus,” said Standard Chartered analyst Suki Cooper.
Other precious metals also posted strong gains, with silver gaining 4.5% to $ 24.99 an ounce. Platinum rose 3.4% to $ 898.71, while palladium jumped 5.2% to $ 2,408.61.