Gold prices on Monday traded higher to start the week, with talk of a last-ditch effort to strike a deal by U.S. lawmakers on a fresh round of fiscal relief before the 2020 presidential elections helping to drive buying appetite, experts said.
A weaker dollar also was paving a path higher for bullion because weakness for the buck can draw interest in gold from buyers using currencies that are relatively weaker than the buck.
Investors have been attuned to the back-and-forth negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin on a new round of funds for American businesses and workers hard hit by the economic weakness caused by the COVID-19 pandemic.
Pelosi spoke on Saturday with Mnuchin according to reports but appeared to suggest that a deal before the 2020 presidential election, between President Donald Trump and Democratic challenger and former Vice President Joe Biden, was unlikely to be achieved if a fiscal deal isn’t struck soon.
Additional relief, should it come, is viewed as bullish for gold which is being used by some as a hedge against governments dialing up spending and lowering interest rates to combat the pandemic that has seen more than 40 million people infected across the globe, according to data aggregated by Johns Hopkins University.
Meanwhile, China’s gross domestic product on Monday was seen expanding by 4.9% in the third quarter from a year earlier, below economists’ average estimates but above levels the nation saw before the viral outbreak took hold late in 2019.
China is one of the world’s biggest importers of commodities and an avid buyer of precious metals like gold.
Against that backdrop, December gold rose $13.80, or 0.7%, to $1,920.20 an ounce, after bullion posted a 1% weekly decline on Friday, based on the most-active contract, according to FactSet data.
Silver for December delivery, meanwhile, added 59 cents, or 2.4%, to reach $24.985 an ounce, following a weekly slide of 2.8%.
Meanwhile, weakness in the dollar was providing an added boost to dollar-priced silver and gold. The dollar on Monday was down 0.4% on Monday at 93.299, as gauged by the ICE U.S. Dollar Index.