Shafaq News/ Gold prices rose on Monday, after hitting a 1-1/2-month low earlier in the session, as prospects of a massive U.S. coronavirus relief aid outweighed a stronger dollar and lifted bullion's appeal as an inflation hedge.
Spot gold rose 0.5% to $1,836.29 per ounce by 0728 GMT, after falling to $1,809.90, its lowest since Dec. 2.
U.S. gold futures gained 0.4% to $1,836.80.
"The gold market remains relatively supported at these levels, as the current run of the U.S. dollar has more to do with safe haven, rather than a discernible pivot to a stronger dollar," said Stephen Innes, chief global market strategist at Axi.
"The U.S. stimulus (plan) is quite large, we're going to get around $1.9 trillion or $1.5 trillion, and either scenario is good for gold," Innes said.
The U.S. dollar hit a four-week peak against rival currencies, making gold expensive for holders of other currencies.
U.S. President-elect Joe Biden last week unveiled a $1.9 trillion stimulus package proposal to jump-start the economy and said he wants 100 million COVID-19 vaccine shots during his first 100 days in office.
Gold is considered a hedge against inflation and currency debasement, likely from large stimulus.
Although U.S. inflation expectations have risen in anticipation of more U.S. fiscal stimulus, gold has not been the sole beneficiary, bond yields have risen and weighed on gold, Phillip Futures said in a note.
"Our market view remain bullish for the long term as the U.S. dollar is expected to remain structurally weak in the long term."
The U.S. Treasury yields scaled a 10-month high last week.
Among other precious metals, silver rose 1.2% to $25.03 an ounce. Platinum rose 0.7% to $1,081.10, while palladium gained 0.3% to $2,389.82.