Gold rose to its highest in a week on Tuesday as the dollar weakened and hopes rose for an additional fiscal stimulus for the American economy, ahead of the first U.S. presidential debate.
Spot gold gained 0.5% to $1,889.85 per ounce while U.S. gold futures climbed 0.7% to $1,895.70.
related investing news
"As we see better prospects for stimulus, we understand there is a tendency to weaken the domestic currency, in this case weaken the dollar and support gold and silver," said David Meger, director of metals trading at High Ridge Futures.
At this point, U.S. Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi "slowly coming to terms over the second stimulus plan is obviously a supportive environment," he added.
Mnuchin and Pelosi are scheduled to speak on Tuesday about coronavirus relief legislation, White House economic adviser Larry Kudlow said.
This comes after Pelosi on Monday said Democratic lawmakers unveiled a new $2.2 trillion coronavirus relief bill.
Gold, seen as a hedge against inflation and currency depreciation, has gained about 24% so far this year on the back of monetary stimulus from major central banks and governments.
Helping gold, the dollar was down 0.4% against a basket of other major currencies as markets waited for the first presidential debate between President Donald Trump and Democratic rival, Joe Biden at 2100 ET (0100 GMT).
"The tide may be shifting slightly back to gold's favor," James Steel, chief precious metals analyst at HSBC said in a note.
"As the focus of the market shifts more decisively to the U.S. elections and the uncertainty that this election cycle brings, it looks like gold and silver have been given a reprieve from last week's heavy liquidation."
Silver rose 1.3% to $24.02 per ounce, platinum added 0.3% to $881.90 and palladium was 2.1% higher at $2,301.78.