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PRECIOUS-Gold firms as dollar, yields ease; Biden stimulus plan in focus
Published at 25/01/2021 at 12:26

(Adds analyst comment, updates prices)

* Dollar hovers near one-week low

* U.S. Fed's policy meeting starts on Tuesday

* Interactive graphic tracking global spread of coronavirus:

By Asha Sistla

Jan 25 (Reuters) - Gold prices rose on Monday as the dollar and yields remained under pressure, with investors eyeing a dovish U.S. Federal Reserve and a big stimulus package under U.S. President Joe Biden's administration.

Spot gold was up 0.5% at $1,860.90 per ounce by 1214 GMT, having fallen as much as 1.8% on Friday. U.S. gold futures

rose 0.2% to $1,860.20.

"We are seeing slightly softer yields in the U.S. so that could be supporting gold... Broadly we are seeing some consolidation after Friday's fall," said OANDA analyst Craig Erlam.

The dollar held close to one-week lows, making gold cheaper for holders of other currencies, while U.S. Treasury yields inched down.

"It's clear that the economy is quite fragile, so there is a lot of support for fiscal and monetary stimulus, and as such the dollar remains relatively weak, which may underpin gold," said independent analyst Ross Norman.

Biden's administration has emphasised the urgency for a $1.9 trillion pandemic relief proposal while trying to calm Republican concerns about it being too expensive.

The U.S. Federal Reserve's two-day policy meeting starts on Tuesday, as it is set to look beyond possible post-pandemic inflation shock.

"Optimism around a $1.9 trillion fiscal stimulus may fuel expectations of the Fed tapering some of its ongoing support. Any taper talk could steepen the U.S. Treasury yield curve, which may provide support to the dollar, ultimately pressuring gold prices," said Lukman Otunuga, senior research analyst at FXTM.

"However, if the Fed expresses a willingness to maintain its ultra-accommodative monetary policy stance, gold is likely to shine."

Non-yielding gold is considered a hedge against inflation that can result from large stimulus measures.

Silver gained 0.8% to $25.60 an ounce, platinum

rose 0.9% to $1,108.39 and palladium added 0.1% to $2,356.07.

(Reporting by Asha Sistla in Bengaluru Editing by David Goodman and Nick Macfie)

((Asha.Sistla@thomsonreuters.com; If within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2808; Reuters Messaging: Reuters Messaging: asha.sistla.thomsonreuters.com@reuters.net))