Gold prices rose on Wednesday as optimism that US lawmakers could reach agreement on a pre-election coronavirus relief package pressured the dollar and bolstered the precious metal’s appeal as an inflation hedge.

Spot gold gained 0.6 per cent to $1,917.76 per ounce by 0323 GMT, having earlier hit a one-week high. US gold futures were up 0.4 per cent at $1,922.80.

The White House and Democrats in the US Congress moved closer to agreement on a fresh stimulus package on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his Republican Party.

Talks will continue on Wednesday, an aide to top US Democrat Nancy Pelosi said.

The news lifted risk appetite and sent the dollar index to a one-month low against a basket of major currencies.

“The falling US dollar is the main contributor to gold’s rise,” said Margaret Yang, a strategist with DailyFx, which covers currency, commodity and index trading.

The pandemic has prompted unprecedented money printing and low-interest rates globally, putting gold on track for its best year in a decade given its appeal as a hedge against inflation and currency debasement.

But the precious metal has been rangebound in the past few sessions, hovering near the psychologically important level of $1,900, as investors await developments on the U.S. stimulus deal.

The market needs more certainty on the U.S. stimulus front before taking a position, IG Markets analyst Kyle Rodda said.

On the physical front, customs data showed Switzerland’s gold exports to China and India dwindled in September, with the country instead importing record volumes of bullion from Hong Kong and sending the metal to Britain.

Elsewhere, silver rose 1.4 per cent to $24.98 per ounce, platinum was up 0.8 per cent at $877.91. Palladium was 0.4 per cent higher at $2,407.95.

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