Gold near nine-year high as US-China woes, stimulus hopes boost appeal

Gold rose to its highest in nearly nine years on Thursday, driven by an escalation in U.S.-China tensions, while expectation of more stimulus measures lifted the metal's appeal as an inflation-hedge.

FUNDAMENTALS
Spot gold was up 0.1% at $1,872.75 per ounce by 0048 GMT, after hitting its highest since September 2011 at $1,876.16 in early Asian trade.


U.S. gold futures rose 0.2% to $1,869.30.

The United States gave China 72 hours to close its consulate in Houston amid accusations of spying, marking a dramatic deterioration in relations between the world's two biggest economies.

Coronavirus cases continued to surge in the United States, with California officially becoming the worst-hit state, exceeding New York, with more than 414,000 cases of COVID-19.

Leading U.S. Senate Republicans and the White House late on Wednesday said they had hammered out agreements in principle on portions of a potential coronavirus-response bill, which could be presented to Democrats as early as this week.

Gold is often used as a safe store of value during times of political and financial uncertainty.

Indicative of sentiment, SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings rose 0.4% to 1,225.01 tonnes on Wednesday from 1,219.75 tonnes on Tuesday.

Further helping gold, the dollar index held near a more than four-month low that it hit in the previous session.

Asian stocks were likely to come under pressure on Thursday as fresh diplomatic tensions between Washington and Beijing heightened investor jitters.

Silver fell 0.7% to $22.86 per ounce, platinum dropped 0.7% to $912.79, while palladium climbed 0.6% to $2,160.91.