Gold prices climbed higher on Monday as investor focus returned to prospects of a substantial US stimulus package, which bolstered bullion鈥檚 appeal as a hedge against inflation.
Spot gold continued to rebound from last week鈥檚 downturn, up 1.2% to $1,834.05 an ounce by 11:35 a.m. EST. US gold futures also rose 1.4% to $1,839.20 an ounce in New York.
鈥淕old is drawing strength from the renewed optimism over US stimulus plans and rising inflation expectations,鈥� Lukman Otunuga, senior research analyst at FXTM, .
鈥淭he metal continues to be pulled and tugged by conflicting forces, and while gold bulls remain protected by the 鈥榬eflation trade鈥�, stimulus hopes continue to lift the market mood and overall risk sentiment,鈥� Otunuga added.
Gold鈥檚 gains came despite a slightly higher dollar, which makes bullion more expensive for buyers with other currencies. Meanwhile, global equities hit a record high on Monday on hopes that the $1.9 trillion aid package will be passed by US lawmakers as soon as this month.
Limiting gold鈥檚 upside, benchmark 10-year Treasury yields hovered near their highest since March last year, increasing the opportunity cost of holding non-yielding bullion.
Gold鈥檚 sister metal silver, which has been the subject of a Reddit-fueled retail investment frenzy for over a week, also rose 2.0% to $27.44 an ounce on the renewed stimulus hopes.
(With files from Reuters)