Gold futures ended higher on Tuesday, extending gains from previous session, as the dollar continued to slide against most of its peers amid expectations of further stimulus.
The dollar index slid to 89.44, losing nearly 0.5% from previous close.
Gold futures for February ended higher by $7.80 at $1,954.40 an ounce.
Silver futures for March ended up $0.276 at $27.640 an ounce, while Copper futures for March settled at $3.6395 per pound, gaining $0.0850 for the session.
In economic news, a report released by the Institute for Supply Management showed an unexpected acceleration in the pace of growth in U.S. manufacturing activity in the month of December.
The ISM said its manufacturing PMI climbed to 60.7 in December after dipping to 57.5 in November, with a reading above 50 indicating growth. Economists had expected the index to edge down to 56.6. With the unexpected increase, the manufacturing index reached its highest level since hitting 61.3 in August of 2018.
The dollar weakened ahead of Georgia’s runoff elections, which will determine whether Republicans or Democrats control power in the U.S. – and with it, the likely fate of President-elect Joe Biden’s legislative agenda.
The elections will determine how much Biden can push through Democrats’ agenda, including rewriting the tax code, boosting stimulus and infrastructure spending.
Market participants hope the Democrats will win both seats in the elections. The Democrats’ victory would mean that the newly elected president can pursue his announced expansionary fiscal policy.