* Dollar index hits four-week high
* Treasury nominee Janet Yellen to say U.S. does not seek weaker dollar
* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa (Updates prices)
By Shreyansi Singh
Jan 18 (Reuters) – Gold inched away from a 1-1/2-month low touched earlier on Monday as expectations of additional fiscal stimulus in the United States buoyed bullion’s appeal as an inflation hedge.
Spot gold was up 0.5% at $1,835.96 per ounce by 12:29 p.m. EST (1729 GMT) after falling to $1,809.90, its lowest since Dec. 2. U.S. GCv1 rose 0.4% to $1,836.50.
“This new (U.S.) government will provide more economic stimulus and also the policy of the U.S. Federal Reserve is unlikely to become more hawkish going forward,” said Commerzbank (DE:) analyst Eugen Weinberg.
“Therefore we are likely to see continued support for gold prices.”
U.S. President-elect Joe Biden laid out a $1.9 trillion stimulus plan last week to aid the economy and ramp up the rollout of vaccinations against COVID-19. Chair Jerome Powell said on Thursday there was no reason to alter the central bank’s accommodative stance given the depth of economic problems due to the pandemic. is considered a hedge against inflation and currency debasement that can result from widespread stimulus.
However, Commerzbank’s Weinberg said a stronger dollar, economic optimism and concerns about Janet Yellen as the U.S. Treasury secretary nominee, who might be restrictive on the fiscal stimulus side, were weighing on gold prices. U.S. dollar touched a four-week peak against a basket of major currencies, limiting bullion’s appeal for holders of other currencies. USD/
Although U.S. inflation expectations have risen in anticipation of more American fiscal stimulus, gold has not been the sole beneficiary – bond yields have risen and weighed on gold, Phillip Futures said in a note.
U.S. Treasury yields scaled a 10-month high last week. US/
Among other precious metals, silver gained 0.6% to $24.88 an ounce, while platinum was up 0.5% at $1,078.52 and palladium lost 0.6% to $2,368.45.