Gold gains as weaker dollar overshadows U.S. stimulus delay woes

GOLD - TOKYO. Gold edged up on Friday as the dollar held near a two-and-a-half-year low, offsetting concerns over delays in a U.S. coronavirus package.

Friday (11/12), spot gold rose 0.1% to $1,837.21 per ounce. U.S. gold futures gained 0.2% to $1,841.50.

"The correlation between gold and dollar has returned because markets have more or less priced in the vaccine optimism," said Margaret Yang, a strategist at DailyFX.

Gold needs a very strong catalyst to break its descending trend and that could be in the form of a dovish Federal Reserve, a larger than expected U.S. fiscal stimulus bill or the unlikely failure of vaccines, she added.

The dollar index was down 0.2% and traded close to 90.5, its lowest since April 2018, making gold cheaper for other currency holders.

Data on Thursday showed U.S. weekly jobless claims jumped to a near three-month high, further evidence that rising COVID-19 infections and lack of additional fiscal stimulus were hurting the economy.

Capping the bullion's gains, however, a top Democrat suggested talks over COVID-19 stimulus package could drag on through Christmas.

Technically, gold looks neutral in a narrow range of $1,828 to $1,846 per ounce, according to Reuters technical analyst Wang Tao.

Gold is seen as a hedge against inflation and currency debasement.

The European Central Bank rolled out more stimulus measures on Thursday to lift the currency bloc out of a double-dip recession.

Gold prices will remain elevated in 2021 due to accommodative rates and a weaker dollar, Fitch Solutions said in a note, adding that the improved economic outlook has reduced the possibility of significant upside.

Silver was steady at $23.94 per ounce and palladium rose 1% to $2,353.73. Platinum was up by 0.1% at $1,027.76 but was set to decline 2.5% this week.