Gold jumped to a two-week high on Thursday as the dollar slipped, with investors betting on the likelihood of bigger economic support measures as Joe Biden inches closer to the Oval Office going into the final stretch of the U.S. elections.
Spot gold was up 0.7% to $1,915.56 per ounce at 0927 GMT, having earlier scaled its highest since Oct. 22 at $1,918.81.
U.S. gold futures gained 1.1% to $1,917.30.
Making bullion cheaper for those holding other currencies, the dollar index held close to a one-week trough.
“A Democrat in the White House would lead to a weakening of the dollar because of the additional spending and the nature of the mandates that he would set,” said StoneX analyst Rhona O’Connell.
“The weaker dollar is not necessarily reflecting the loss of confidence or anything, it’s more a question of what the markets would expect from a Biden presidency.”
Democrat Biden moved closer to victory on Thursday, while incumbent President Donald Trump alleged fraud and called for recounts even as officials tallied votes in the handful of states that will determine the final outcome.
Analysts expect Biden to enact larger stimulus measures than Trump, but chances of a divided Congress could stymie Biden’s fiscal policy.
Gold is considered a hedge against likely inflation fuelled by the unprecedented money printing by central banks to ease the economic blow from a worsening coronavirus pandemic.
“Markets expect a stimulus package and the certainty of an outcome, regardless of it being contested, now has reduced investors’ fears and prompted them to move back into assets like gold and equities,” said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.
Also on investors’ radar was the U.S. Federal Reserve’s policy decision at 1900 GMT.
Silver jumped 2.2% to $24.44 an ounce. Platinum rose 1.2% to $880.05, while palladium gained 2% to $2,333.62.
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