Gold prices jump 1% on weaker US dollar

Gold prices edged higher on Wednesday, bolstered by a weaker dollar, while investors kept hopes pinned on a US stimulus package, even after President Donald Trump threatened not to sign the relief bill.

Spot gold was up 0.7% at $1,872.67 per ounce by 12:55 p.m. EST, having risen as much as 1% earlier in the day. Meanwhile, US gold futures rose 0.4% to $1,877.50 per ounce in New York.

“The economic data just cements the belief that the economy is slowing down and that should help the negotiations with stimulus … it’s going to be extremely likely that some type of stimulus deal will still get done,” Edward Moya, senior market analyst at OANDA, told Reuters.

“The slightly weaker dollar has provided a move higher for gold,” Moya continued, adding the stimulus deal and positive developments on the Brexit front are needed to further cement gold’s bullish case.

The dollar index dropped 0.5%, as investors expect further declines in 2021.

Earlier, President Trump threatened not to sign the $892 billion coronavirus relief bill, seen as a lifeline for the nation’s pandemic-battered economy, saying the amount in the stimulus checks should be increased.