Gold prices hit a one-week high on Tuesday and the dollar struggled at a one-week low after analysts said massive fiscal spending coupled with continued ultra-easy Federal Reserve monetary policy will be a dollar headwind.
Spot gold climbed 0.9 percent to $1,846.27 per ounce, while U.S. gold futures were up 0.7 percent at $1,847.15.
The dollar weakened broadly against its peers amid growing optimism over the passage of a $1.9 trillion stimulus package by the U.S. government.
House Democrats released a draft of stimulus plan on Monday evening, which includes $1,400 stimulus checks, $400 federal unemployment benefits, funding to state and local governments and vaccine distribution among other provisions.
Democrats are rushing to put the stimulus plan for a floor vote by the end of the month. Thereafter, the bill would go to the Senate for approval.
Uncertainty over U.S. economic recovery and the prevalent risk-on environment on the back of vaccine rollouts also undermined the dollar’s relative safe-haven status.
The material has been provided by InstaForex Company – www.instaforex.com