Gold Gains for Third Day on Weaker Dollar With Stimulus in Focus

(Bloomberg) -- Gold climbed for a third straight day as the dollar and real Treasury yields declined, with traders weighing prospects for a fast-tracked stimulus package in the U.S.

The precious metal headed for the longest run of gains since Jan. 5 after Democrats released the first draft of key legislation that will comprise President Joe Biden’s Covid-19 relief bill. Bets on a robust package of support are helping to underpin market-derived inflation expectations, which are at multiyear highs, and have fanned the so-called reflation trade.

Bullion is rebounding from the lowest level since the start of December. A disappointing jobs report released Friday was taken as yet another sign Biden will prevail in pushing through his stimulus package, boosting inflation even as the economic recovery remains fragile. A report on Wednesday is forecast to show U.S. consumer prices rising at a quickening pace.

“A weaker U.S. dollar and real rates having fallen a bit in recent days is supporting gold,” said Giovanni Staunovo, an analyst at UBS Group AG. That’s “all driven by the fiscal package news moving forward finally.”

Spot gold advanced 0.9% to $1,847.17 an ounce by 9:47 a.m. in London. Silver, platinum and palladium all rose. The Bloomberg Dollar Spot Index fell 0.4%.

Meanwhile, traders were also watching the surge in Bitcoin, which rallied on Monday after Tesla Inc. bought $1.5 billion of the cryptocurrency, before extending gains on Tuesday to notch a fresh record. The automaker said that its revised policies also permit it to invest in gold.

Bitcoin’s volatile ascent has spurred debate among banks whether the new product will complement bullion, or challenge its status. In December, Goldman Sachs Group Inc. said the pair will be able to coexist.

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