Gold jumps over 1% as surging virus cases renew stimulus hopes

A gold bar is wrapped in a financial newspaper.
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Gold gained more than 1% on Tuesday, bolstered by expectations of more coronavirus relief aid in the United States as mounting COVID-19 cases renewed concerns over the pandemic's economic toll.

Spot gold was up 1.4% at $1,852.36 per ounce, while U.S. gold futures settled up 1.3% at $1,855.30.

"There is the possibility of getting stimulus passed and that is what the gold market has been waiting for," said Jeffrey Sica, founder of Circle Squared Alternative Investments.

"Most people have come to terms with the fact that the vaccine will stop the next wave, but will have very little to do with the current wave."

A staggering COVID-19 U.S. death toll put pressure on lawmakers to roll out relief aid, buoying optimism around a $1.4 trillion bill. Gold, regarded as a hedge against likely inflation and currency debasement, has risen over 22% so far this year amid the unprecedented stimulus unleashed globally.

Surging infections also led to tighter restrictions being imposed in the Netherlands, Germany and London.

A weak dollar further enhanced appeal for greenback-denominated bullion.

Investors also awaited the U.S. Federal Reserve's meeting starting on Tuesday, with the central bank expected to maintain interest rates at near-zero.

Gold has resistance at $1,879 an ounce, with a close above the $1,894 level gearing prices to go up to $1,920, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Silver jumped 2.7% to $24.45 an ounce, and palladium

gained 1.9% to $2,336.62. Both metals rose more than 3% earlier in the session.

"Silver's dual roles as a precious metal and an industrial material makes it more appealing during times when economic activity is expected to rebound," said Fawad Razaqzada, market analyst with ThinkMarkets.

Platinum rose 1.8% to $1,025.08.