Feb 8 (Reuters) – Gold jumped more than 1% on Monday as expectations of a large U.S. economic stimulus package bolstered bullion’s appeal as an inflation hedge.
Spot gold rose 1.1% to $1,831.28 per ounce by 2:23 p.m. EST (1923 GMT). U.S. gold futures settled up 1.2% at $1,834.20.
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“Yellen talking about full employment by 2022 with $2 trillion in stimulus is driving the likelihood of a surge in inflation, which is good for gold,” said Tai Wong, head of base and precious metals derivatives trading at BMO.
Major U.S. stock indexes rose to record highs on the boost to economic recovery bets.
The “inflation trade” could supersede any negative impact the dollar might have on gold and silver, said Jim Wyckoff, senior analyst with Kitco Metals.
In its 2020 annual report, Tesla also said it may invest in “certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.”
But “Bitcoin and gold have been basically uncorrelated. The current surge in Bitcoin may be adding to the sentiment, but is not a primary driver,” BMO’s Wong said.
An interest in asset classes that are a store of value such as gold and silver, after Tesla’s Bitcoin purchase, is helping prices, said David Meger, director of metals trading at High Ridge Futures.
Meanwhile, silver rose 2.2% to $27.42 an ounce and platinum rose 3.2% to $1,159.73, while palladium fell 0.7% to $2,321.41.
Reporting by Shreyansi Singh in Bengaluru
Editing by Paul Simao
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