Gold Creeps Up on New Virus Strain

Gold prices edged a tick higher on Thursday, as expectations of a $2-trillion-plus stimulus plan in the United States raised concerns of inflation, while reports of a new vaccine-resistant virus strain also supported bullion’s safe-haven appeal.

Spot gold was up 0.2% at $1,710.28 per ounce overnight, though it was set for its second straight weekly fall.

U.S. gold futures fell 0.3% to $1,709.80 per ounce.

U.S. President Joe Biden on Wednesday called for a sweeping use of government power to reshape the world’s largest economy and counter China’s rise in a $2 trillion-plus proposal that was met with swift Republican resistance.

Stimulus measures increase the chances of higher inflation and gold is often considered as a hedge against it.

The World Trade Organization slightly raised its growth forecast for global goods trade this year, but said the outlook was clouded by risks from the rollout of coronavirus vaccines and the possible emergence of vaccine-resistant strains.

U.S. government bond yields rose on Wednesday after the U.S. President unveiled the infrastructure endeavor.

The U.S. dollar will remain strong for at least another month, according to a poll of foreign exchange strategists, who still forecast that the currency will weaken in the longer term.

Silver dipped 0.1% to $24.36 U.S., while platinum was down 0.3% at $1,184.14 U.S. and palladium slipped 0.1% to $2,616.55 U.S.