Gold price hovers near nine-year high as virus fears drive safe-haven demand

Gold rose on Tuesday, hovering near a nine-year peak hit in the last session, as worries over a spike in COVID-19 cases and expectations for inflation from more economic stimulus measures boosted demand for the safe-haven metal.

Spot gold was up 0.1% at $1,817.23 per ounce by 0300 GMT, after hitting its highest since September 2011 at $1,820.06 on Monday. U.S. gold futures were little changed at $1,817.80.

"What`s really driving gold market is stimulus and we are going to get more of it. Its the eye candy that`s driving sentiment right now," said Stephen Innes, chief market strategist at financial services firm AxiCorp.

European Union leaders appeared to near an agreement on Monday on a 750-billion-euro stimulus plan for regional economies hit by the pandemic.

Adding to hopes for more economic stimulus, congressional Republicans announced plans to seek another $1 trillion in coronavirus economic relief.

Gold tends to benefit from widespread stimulus measures from central banks as these typically stoke inflation and the metal is widely viewed as a hedge against rising prices and currency debasement.

Rising coronavirus cases in the United States and elsewhere have intensified fears over global economic recovery, driving flows into safe-haven assets.

Indicative of sentiment, holdings of SPDR Gold Trust rose 0.4% to 1,211.86 tonnes on Monday.

Further helping gold, the dollar index fell to a more than four-month low against a basket of major currencies.

Silver also gained 0.2% to $19.95, its highest level since September 2016.

"Silver is starting to outperform gold here. On the one hand, it`s obviously appreciating on the basis of increased appeal for precious metals," IG Markets analyst Kyle Rodda said.

"On top of that, there`s likely to be an element of silver catching a bit on a rebound in global industrial activity."

Palladium was steady at $2,055.35 per ounce, while platinum fell 0.3% to $841.57.