Gold edged up on Tuesday as the dollar weakened ahead of U.S. Treasury Secretary nominee Janet Yellen’s speech later in the day, with prospects for more fiscal stimulus buoying bullion‘s appeal as an inflation hedge.
Spot gold was up 0.2% to $1,840.56 per ounce at 9:25 a.m. EST (1425 GMT), recovering from its lowest since Dec. 2 at $1,809.90 hit on Monday.
U.S. gold futures gained 0.5% to $1,839.70. In her confirmation speech, Yellen is expected to affirm Washington‘s commitment to market-set currency rates.
Gold investors are “waiting for the details of the stimulus package, especially for Janet Yellen’s speech as far as what her intention is going to be,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.
“The dollar is going to decline substantially and that’s going to help gold prices dramatically in the near future.” The dollar index slipped from a four-week high hit in the last session, making bullion cheaper for holders of other currencies.
Investors also await U.S. President-elect Joe Biden‘s inauguration on Wednesday, and security measures have been stepped up in the light of the Jan. 6 attack on the U.S. Capitol. With Yellen expected to bolster the case for more fiscal stimulus, U.S. stock index futures also rose.
“As long as we get this momentum (in equities) on the upside, it makes gold prices relatively trade within a range,” Sica said, adding the likelihood of more stimulus was very positive for gold.
Gold is considered a hedge against inflation and currency debasement that can result from widespread stimulus.
“Global central bank members are cognizant that even though equity markets are doing well, the underlying economy is still very weak and stimulus measures are needed,” said Michael Langford, director at corporate advisory AirGuide.
Silver eased 0.4% to $25.24 an ounce, platinum gained 0.9% to $1,089.30 and palladium was steady at $2,370.73.