Gold prices hit a fresh two-month high on Wednesday as the dollar slid on growing expectations of a Democratic win in the U.S. Senate run-off election in Georgia, which would likely lead to additional fiscal stimulus.
Spot gold was up 0.4% to $1,956.86 per ounce at 1029 GMT, having hit a near two-month peak at $1,959.01 earlier in the session. U.S. gold futures were up 0.3% to $1,960.40.
“A Biden win in Georgia opens the gates to a much larger stimulus. The markets have been anticipating that by its moves higher in the last few days,” said Ross Norman, an independent analyst, referring to U.S President-elect Joe Biden.
“Whether that turns into (something) productive down the line remains to be seen, but clearly they’re going to be adding considerable debt onto considerable debt, and that’s good for gold.”
Democrats took the lead in runoff votes that will determine control of the U.S. Senate and possibly pave the way for a big spending administration under Biden.
Non-yielding bullion is seen as a hedge against the inflation that is likely to result from record fiscal stimulus.
The dollar index fell to fresh 2-1/2-year lows, making bullion cheaper for other currency holders.
Meanwhile, minutes of the U.S. Federal Reserve’s Dec. 15-16 policy meeting are due at 1900 GMT.
The Fed might decide to unleash more monetary stimulus once it has a clearer picture on how the U.S. Congress turns out, said Howie Lee, an economist at OCBC Bank.
In other metals, silver gained 0.7% to $27.77 an ounce. Platinum fell 0.2% to $1,109.11, while palladium was up 0.2% to $2,471.01.
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