In Delhi, gold gained for the third day, rising Rs 347 to Rs 48,758 per 10 gram | Photo: Reuters
Gold rose on Wednesday to a one-week high as the dollar weakened on US Treasury secretary nominee Janet Yellen's call to "act big" on measures to help the American economy recover from the impact of the pandemic. Brent Crude, too, jumped and traded above $56 a barrel.
Spot gold gained 1.18 per cent to $1,862.10 per ounce by 8.20 pm IST, having risen 1 per cent to a near one-week high earlier. In Delhi, gold gained for the third day, rising Rs 347 to Rs 48,758 per 10 gram.
"Gold looks fairly positive after all that talk about stimulus yesterday from Yellen weakened the dollar," said Michael Hewson, chief market analyst at CMC Markets
UK, adding that President Biden's inauguration would provide more details about fiscal policy.
"If US bond yields start to slip back then gold will regain some of the attraction it lost ...(if) Treasury yields remain fairly resilient, the upside for gold is likely to remain at the highs seen earlier this month."
Gold is generally considered a hedge against the inflation that can result from widespread stimulus. However, higher bond yields have challenged that status recently as they increase the opportunity cost of holding non-yielding bullion.
The surge in oil prices, too, was supported by expectations the new US administration will deliver massive stimulus spending that would lift demand, as well as by Opec curbs and forecasts of a drop in US crude inventories. Brent crude
was up 66 cents, or 1.18 per cent, to $56.56 at 8.27 pm IST, after a 2.1 per cent gain on Tuesday. US West Texas Intermediate crude climbed 1.25 per cent to $53.64.
“Increased fiscal support means more growth and higher US oil demand,” said Eugen Weinberg of Commerzbank. “What is more, the oil market is likely to remain in supply deficit both in the first quarter and in the year as a whole.” This month Brent hit an 11-month high of $57.42, helped by Saudi Arabia pledging to make additional, voluntarily cuts and most Opec+ members agreeing to keep output steady in February.