(Reuters) – Gold held steady on Friday as expectations that a U.S. stimulus package would eventually be passed offset pressure from a stronger dollar.
Spot gold was little changed at $1,903.36 per ounce by 0631 GMT, after slipping more than 1% in the previous session. U.S. gold futures rose 0.01% to $1,905.80.
Gold, which is considered as a hedge against potential inflation, is up 0.3% for the week.
“Concerns over rising COVID-19 cases and the increasing likelihood of a democrat win in the U.S. election, which is likely to result in greater stimulus and weaken the dollar, are helping gold rise,” said Cameron Alexander, manager of precious metals research at Refinitiv Metals Research.
“Signs of a potential (U.S. stimulus) deal earlier may have provided some upwards momentum.”
House Speaker Nancy Pelosi on Thursday said negotiators were making progress in talks with the White House over the coronavirus fiscal aid package and a deal could be reached “pretty soon”.
“If we get the inflation spark, gold can go to $2,000… without that, I don’t think we can get up there,” said Stephen Innes, chief global market strategist at Axi.
The dollar index rose 0.1% against a basket of major currencies, making gold more expensive for other currency holders.
Market focus now shifts to the Nov. 3 U.S. presidential election after President Donald Trump and Democratic challenger Joe Biden offered sharply contrasting views on the pandemic at Thursday’s final presidential debate.
“Gold will find plenty of willing buyers on dips to $1,900 as investors rotate into haven positioning as the U.S. election draws nearer,” Jeffrey Halley, senior market analyst at OANDA, said.
Elsewhere, silver fell 0.9% to $24.54 per ounce, but was set for a weekly rise of 1.5%. Platinum fell 0.3% to $882.40 and palladium rose 0.6% to $2,387.02.
Reporting by Nakul Iyer in Bengaluru; Editing by Amy Caren Daniel