Gold bounced back from a 10 -month low by climbing back above $ 1,700 an ounce as expectations of the latest US stimulus plan raised concerns over inflation.
President Joe Biden has finally launched a $ 2.25 trillion infrastructure plan whose expenses will be borne by raising corporate income taxes higher.
Stimulus measures raise expectations of higher inflation and gold is often seen as a hedge against it.
With the launch of this latest plan, it will likely provide short -term support for gold to rise.
The overnight rise was also supported by the depreciation of the US dollar which may be due to investors wanting to take profits before the end of the first quarter trading session of this year.
In the Asian session, gold traded higher at $ 1,713 per ounce after jumping over 300 pips as can be seen on the XAU/USD price chart which measures the value of gold against the USD.
Even with the last-minute spike, gold remained at a loss of around 1% in March and on a quarterly basis it has fallen by almost 10%.
Various factors contributed to the sharp decline in gold prices in the first quarter of this year such as rising US 10 -year bond yields, rising recovery expectations and strong equity markets pushing the three major indices to all -time highs during the quarter.
