Gold revives as investors bet on more stimulus

Gold prices recorded their first gain in three weeks despite a sell-off on Friday, as investors placed their bets on further stimulus from the United States. Gold’s decline on Friday was part of a broader sell-off across all asset classes as the dollar strengthened, while benchmark US Treasury yields steadied above 1%.

US President Joe Biden has proposed a $1.9-trillion coronavirus relief plan, though some Republicans have expressed concerns over the amount. The House of Representatives is expected to start debating the plan on Feb 1.

The afternoon gold fixing on Friday in London was $1,852.70 an ounce, compared with $1,839.00 a week earlier.

Selling prices in Thailand held steady at 26,350 baht per bahtweight (15.2 grammes).

Demand for physical gold picked up last week as the approaching Chinese New Year on Feb 12 encouraged buyers in China and Singapore, with dealers expecting more purchases in coming weeks.

Chinese dealers were charging 50 cents to $4 an ounce over benchmark spot gold prices, unchanged from the week before, when they added a premium, after having been forced to offer heavy discounts for much of 2020 as the pandemic squeezed retail demand.

Buying crept up in Singapore and is expected to recover in the coming weeks, traders said.

“We envisage strong retail demand outlook over the next few months on the back of seasonal factors such as the upcoming Chinese New Year and the new 2021 bullion coin releases from the major national mints,” said Ronan Manly, precious metals analyst at BullionStar Singapore.

Indian dealers were charging a premium of up to $1 an ounce over official prices, inclusive of 12.5% import and 3% sales levies and up from last week’s premium of 50 cents.

“Slowly demand has been improving. Retail buyers are making purchases for weddings,” said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in Kolkata.