PRECIOUS-Gold jumps 1% on dollar slide, U.S. stimulus progress

(Updates prices)
* Bank of England keeps stimulus programme unchanged
* Dollar hovers near a two-and-a-half-year low
* Interactive graphic tracking global spread of coronavirus:
open
* https://tmsnrt.rs/3aIRuz7 in an external browser

By Diptendu Lahiri
Dec 17 (Reuters) - Gold prices rose as much as 1% on
Thursday as the dollar index extended its slide on progress with
U.S. stimulus plans and the Federal Reserve's commitment to pump
more cash into the economy and keep interest rates low.
Spot gold XAU= was up 0.7% at $1,876.37 per ounce at 1223
GMT, having hit a near one-month high of $1,882.76 earlier in
the session. U.S. gold futures GCv1 were up 1.3% at $1,882.70.
"The Fed's decision clearly indicates that it is not
convinced of an economic recovery yet," Quantitative Commodity
Research analyst Peter Fertig said.
"Given, the stand of the Fed and other central banks, there
are indications that inflation will go up in future and with the
dollar index down quite a bit, gold looks like an attractive
investment."
Legislators said on Wednesday, U.S. congressional
negotiators were "closing in" on a $900 billion COVID-19
assistance package planned to provide $600-$700 stimulus checks
for individuals, dragging the dollar to a more than two year
low. USD/ The Fed has vowed to maintain its bond-buying policy before
"substantial further progress" is made to restore full jobs and
meet its 2% inflation target. "If the central banks keep tolerating a higher inflation
level, it will bring down real rates further, helping reduce the
opportunity cost of holding gold," said Ravindra Rao, vice
president, commodities at Kotak Securities.
The Bank of England kept its stimulus programme unchanged on
Thursday as it awaited the outcome of Britain's negotiations
with the European Union over a post-Brexit trade deal.
"Fundamentally, gold is still quite strong and if it closes
above $1,880 an ounce today we might see it going up to $1,950
before the year ends," Rao said.
In other metals, silver XAG= rose 1.4% to $25.69 an ounce.
Platinum XPT= gained 1.7% to $1,052.22 and palladium XPD=
was up 0.9% at $2,346.85.