PRECIOUS-Gold edges higher as U.S. stimulus progress dents dollar

Shafaq News/ Gold prices scaled a fresh one-week peak on Thursday as progress on a U.S. fiscal stimulus deal weighed on the dollar, while a pledge by the Federal Reserve to keep rates low until an economic recovery is secure lent further support.

According to Reuters, Spot gold rose 0.3% to $1,869.36 per ounce by 0600 GMT, having hit a one-week high of $1,870.11 earlier in the session. U.S. gold futures were up 0.7% at $1,871.60.

 U.S. lawmakers inching closer to agreement on a fiscal stimulus is supporting gold, though markets are likely to be disappointed by the fiscal package size and it is unlikely to reverse gold's downward trend seen over the past few months, said DailyFX currency strategist Ilya Spivak.

"The market likely read into what the Fed was saying as a pre-commitment to continue quantitative easing and took support from that," said Spivak, adding that the metal remained sensitive to the Fed's less dovish stance on the volume and tenure of bond purchases.            

  The Fed on Wednesday more explicitly promised to continue its bond-buying program until there is "substantial further progress" in restoring full employment and hitting its 2% inflation target.              

Inflation will now be expected to do the heavy-lifting to push the dollar lower and break-evens higher, which would send gold vectoring higher, said Stephen Innes, chief global market strategist at financial services firm Axi in a note. 

 Investors now await the Bank of England's policy decision, due at 1200 GMT, where it is expected to refrain from further stimulus.            

As for other metals,  Silver rose 0.4% to $25.44 an ounce. Platinum gained 0.8% to $1,042.53 and palladium was up 0.6% at$2,339.70.