Gold prices jumped as much as 1.5 per cent to more than a one-week high overnight, after hopes of more stimulus from the United States to cope with a coronavirus-led lockdown.
Spot gold was up 0.8 per cent at $US1,726.94 per ounce at 1736 GMT. Earlier in the session, it reached $US1,738.58, the highest level since April 14.
US gold futures settled up 0.4 per cent, at 1,745.40.
“Supporting gold is the continuation of global central bank stimulus, particular today … Here in the US we’re voting on an additional $US500 billion stimulus bill,” said David Meger, director of metals trading at High Ridge Futures.
Members of the US House of Representatives were due to gather in Washington on Thursday to pass a $US484 billion coronavirus relief bill, bringing the unprecedented total of funds approved for the crisis to nearly $US3 trillion.
The bill would be the fourth passed to address the crisis and provides funds to small businesses and hospitals struggling with the toll of the pandemic that has killed more than 47,000 Americans.
The US Labor Department said 4.427 million more people applied for unemployment benefits last week, taking the total in the past five weeks to a record 26 million, as restrictions to curb the coronavirus outbreak slam the economy.
“The unemployment rate seems poised to hit the 20 per cent level and this alone should be reason enough for the Federal Reserve and Trump administration to keep throwing stimulus into the economy,” Edward Moya, a senior market analyst at broker OANDA, said in a note.
“Gold’s climb towards $US1,800 per ounce continues. The stimulus trade is not going away anytime soon and that should mean record highs for gold (in dollar terms) by the summer.”
Gold tends to benefit from widespread stimulus measures from central banks and governments because it is widely viewed as a hedge against inflation and currency debasement.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.9 per cent to 1,042.46 tonnes on Wednesday – the highest in nearly seven years.
Meanwhile, European Union leaders began searching for a joint financial fund of up to 2 trillion euros to help the bloc recover from the pandemic and avoid a collapse in the economies of its poorer southern members.
Elsewhere, palladium gained 2.6 per cent to $US1,989.37 per ounce and platinum rose 0.1 per cent to $US758.12. Silver was 0.2 per cent higher at $US15.18.