Gold jumped about 1% on Monday as the dollar weakened, while expectations around the U.S. Federal Reserve maintaining its dovish monetary policy this week further boosted the safe haven metal's allure.
Spot gold rose 0.9% at $1,959.64 per ounce. U.S. gold futures rose 1.1% to $1,969.
"Gold is rising as the dollar is under quite a bit of pressure. We also saw Steven Mnuchin indicating that they want some kind of fiscal stimulus deal done, so that would further weaken the dollar," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, referring to the U.S. treasury secretary.
The dollar fell 0.4% against rivals, bolstering gold's appeal for investors holding other currencies. Mnuchin said there still could be a deal with the U.S.
Congress for more federal coronavirus-related aid and that he looked forward to a bipartisan proposal from lawmakers expected later on Monday. Bullion has risen 29% this year prompted by massive stimulus from global central banks to combat the impact of the coronavirus pandemic. Investors are now eyeing the Fed's policy decision due on Wednesday.
"The Fed is expected to maintain the target rate of inflation, we're going to run 2% for some time and they will increase Quantitative Easing (QE) buying, so gold should remain supported on that," Streible said.
Market participants are also waiting for the Bank of Japan and the Bank of England's policy decisions due on Thursday.
Meanwhile, the European Union ramped up pressure on Prime Minister Boris Johnson to step back from breaking the Brexit divorce treaty. Gold will continue to move higher on political uncertainties in the United States, on Brexit and overall the weak economic conditions in the world, said Jeffrey Christian, managing partner of CPM Group.
Silver rose 2% at $27.26 per ounce, platinum gained 3.1% to $953.72, while palladium climbed 1% to $2,343.02.