Gold gains on weak dollar as focus turns to Georgia runoffs

A gold bar is wrapped in a financial newspaper.
GSO Images | Getty Images

Gold hit a two-month high on Tuesday, buoyed by a weaker dollar and growing concerns about COVID-19 as investors awaited the outcome of U.S. Senate runoff elections in Georgia that could impact prospects for more fiscal stimulus.

Spot gold was up 0.4% at $1,950.34 an ounce, having earlier scaled its highest level since Nov. 9, at $1,952.36. U.S. gold futures gained 0.3% to $1,952.50.

"With more risks associated with the virus, short term, we're seeing people moving money into the safe havens," said Chris Gaffney, president of world markets at TIAA Bank, adding that the dollar's weakness has been one of the main supports for bullion in the first few days of 2021.

Britain went into a new national lockdown amid rising COVID-19 cases, while New York found its first case of a more contagious coronavirus variant.

The dollar index hovered close to April 2018 lows, making gold an attractive bet for other currency holders. But caution prevailed as investors awaited the outcome of a pair of run-off elections in Georgia as control of the U.S. Senate - and with it the ability to block or advance Democratic President-elect Joe Biden's agenda - was on the ballot.

"There is not one central bank talking about raising rates across the globe. So that's going to keep a bid on gold," said Michael Matousek, head trader at U.S. Global Investors.

Many investors view non-yielding bullion as a hedge against inflation and currency debasement they fear could result from large stimulus measures.

Silver rose 0.9% to $27.46 and palladium gained 4.7% to $2,484.68, after rising as much as 6% earlier in the session.

Platinum was up 3.5% at $1,107.34, having risen as much as 4.1% earlier.

"Thoughts about global growth are really going to drive the industrial precious metals which are platinum and palladium," TIAA Bank's Gaffney said.