Gold prices gain some ground on stimulus hopes

Gold prices edged higher in early Asian trade on Tuesday after falling as much as 5.2% in the previous session, as hopes of more U.S. stimulus measures to weather the impact of rising COVID-19 cases nudged investors towards the precious metal as an inflation hedge.

FUNDAMENTALS
Spot gold rose 0.5% to $1,871.81 per ounce by 0136 GMT

It fell to $1,849.93, its lowest level since Sept. 28, on Monday after U.S. drugmaker Pfizer Inc said its experimental COVID-19 vaccine was more than 90% effective, based on initial trial results.

"I still think we've got more stimulus coming and the Fed will keep rates low, while a vaccine is going to provide that reflationary impulse... That's why the markets are still holding onto gold," said Stephen Innes, chief global market strategist at financial services firm Axi.

U.S. gold futures were up 0.8% at $1,869.40.

U.S. President Donald Trump's campaign on Monday filed a lawsuit in a Pennsylvania federal court, seeking to block state officials from certifying President-elect Joe Biden's victory in the state.

Dallas Federal Reserve Bank President Robert Kaplan said on Monday the U.S. economy is rebounding from a deep contraction, but the resurgence of COVID-19 poses downside risks.

Cleveland Federal Reserve Bank President Loretta Mester said the emergency lending programs the Fed set up during the coronavirus pandemic are still needed.

Holdings in SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.83% to 1,249.79 tonnes on Monday.

Silver rose 0.1% to $24.10 per ounce. Platinum and palladium were up 0.2% at $868.30 and $2,483.07, respectively.