Gold prices jumped as much as 1.9% on Wednesday on expectations for more fiscal and monetary stimulus measures amid massive economic damage due to stay-at-home and business shutdown orders around the world to limit the spread of the novel coronavirus.
Spot gold was up 1.6% at $1,711.84 per ounce, which could be its biggest daily gain in nearly two weeks. U.S. gold futures settled 3% higher at 1,738.30.
"This is the perfect storm for gold... Perpetual buyer is buying gold because of all the global stimulus going on," said Michael Matousek, head trader at U.S. Global Investors.
"Gold is in a bull market. You'll be hard pressed to find something else that has this type of price action and this trend going on right now so you naturally have people gravitating towards it."
Gold tends to benefit from widespread stimulus measures from central banks, as it is often seen as a hedge against inflation and currency debasement.
The U.S. House of Representatives will pass Congress' latest coronavirus aid bill on Thursday, House Speaker Nancy Pelosi said, paving the way for nearly $500 billion more in economic relief amid the pandemic.
The coronavirus pandemic has forced many countries to extend lockdowns to curb its spread and unleash unprecedented amounts of fiscal and monetary to support their economies.
"Gold prices are an economic and political barometer of our well-being and investors are doing what central banks do, buy gold to shore up currencies," George Gero, managing director at RBC Wealth Management said in a note.
A jump in the price of oil and hopes of more government stimulus to ease the economic pain inflicted by the coronavirus outbreak helped calm global equity markets on Wednesday.
The bullion had dipped to a near two-week low at $1,659.68 per ounce on Tuesday as a wider market sell-off drove a scramble for cash and prompted investors to sell precious metals to cover losses.
"Technically, the gold bulls have the firm overall near-term technical advantage amid price uptrends in place on the daily, weekly and monthly charts," Kitco Metals senior analyst Jim Wyckoff said in a note.
"Bulls' next upside price objective is to produce a close in June futures above solid resistance at $1,800."
Elsewhere, palladium rose 0.4% to $1,931.29 per ounce, having touched a near one-month low in the previous session.
Platinum gained 0.9% to $753.03 per ounce, while silver rose 1% to $15.07.