Gold inched down from a three-week high as the dollar recouped some of its losses after a new U.S. coronavirus aid package ran into resistance.
Spot gold fell 0.1% to $1,927.11 per ounce by 0629 GMT, after hitting its highest level since Sept. 21 at $1,932.96 earlier in the session. U.S. gold futures were up 0.5% at$1,934.70 per ounce.
“The dollar index has rebounded slightly, weighing on the precious metal,” said Margaret Yang, a strategist with DailyFx, which covers currency, commodity and index trading.
But, “the technical trend has turned bullish in the near term and very soon it may test the key resistance level of $1,942,” she added.
The dollar index steadied and was trading below a three-week low against rivals, after negotiations on the U.S. stimulus package ran into resistance and as the yuan dropped after China’s central bank took a measure seen as aimed at curbing its strength.
The Trump administration on Sunday called on Congress to pass a stripped-down coronavirus relief bill using leftover funds from an expired small business loan programme.
But while the $1.8 trillion economic stimulus proposal drew criticism from congressional Democrats and Republicans, investors seem optimistic that spending will resume at some point.
“There is going to be a stimulus coming really quickly after the election… The market will look through the fact that we don’t have stimulus now but that it is coming and that will be supportive for gold,” Stephen Innes, chief global market strategist at Axi.
Gold, considered a hedge against inflation and currency debasement, has gained over 27% so far this year, boosted by unprecedented stimulus measures unveiled globally to cushion the economic fallout from the COVID-19 pandemic.
Silver gained about 1% to $25.36 per ounce and palladium fell 0.1% to $2,437.79, while platinum rose 0.2% to $887.57.