Gold prices near 9-year high on soft dollar and stimulus speculations

Gold prices rallied more than 1 percent to its highest in nearly 9 years, boosted by a weaker dollar and expectations of more stimulus to revive pandemic-hit economies. However, encouraging results from several COVID-19 vaccine trials capped upside.

Spot gold was trading 0.4 percent higher at $1,849.59 per ounce by 0825 GMT, having hit a high of $1,865.83 earlier, its highest since September 2011. U.S. gold futures rose 0.3 percent to $1,850.51.

The dollar held near a more than 4-month low against a basket of currencies, undermined by concern that Republicans and Democrats are struggling to reach consensus on the next round of U.S. economic stimulus measures.

Republican and Democratic lawmakers said they expected the legislation to include more funding for coronavirus testing, despite earlier resistance to the idea from President Donald Trump’s administration. House Speaker Nancy Pelosi said the $1 trillion package the Republicans are considering is not sufficient.

The United States has recorded more than 3.8 million coronavirus cases and over 141,000 deaths, while 10 million have been unemployment.

European Union leaders reached an accord on a massive stimulus plan to fuel recovery from the economic damage caused by the COVID-19 pandemic. The 27-member bloc narrowed their differences and sealed a 750 billion euro recovery fund and a 1.1 trillion euro 2021-2027 budget to help the continent recover from its deepest recession since World War II.

Data released earlier in the week showed trials of three potential COVID-19 vaccines, including a closely watched candidate from Britain’s Oxford University and one from CanSino Biologics and China’s military research unit.

Investors will now focus on possible further U.S. measures after the $3 trillion injected earlier this year and also U.S. existing home sales due later Wednesday and weekly jobless claims on Thursday for further clues on the strength of the economy.