Gold rose 1% on Wednesday as the dollar weakened on U.S. Treasury secretary nominee Janet Yellen's call to "act big" on measures to help the U.S. economy recover from the impact of the pandemic.
Spot gold gained 0.5% to $1,848.10 per ounce by 1236 GMT, having risen 1% to a near one-week high earlier. U.S. gold futures added 0.4% to $1,847.30.
"Gold looks fairly positive after all that talk about stimulus yesterday from Yellen weakened the dollar," said Michael Hewson, chief market analyst at CMC Markets UK, adding that President Biden's inauguration would provide more details about fiscal policy.
"If U.S. bond yields start to slip back then gold will regain some of the attraction it lost ...(if) Treasury yields remain fairly resilient, the upside for gold is likely to remain at the highs seen earlier this month."
Gold is generally considered a hedge against the inflation that can result from widespread stimulus. However, higher bond yields have challenged that status recently as they increase the opportunity cost of holding non-yielding bullion.
Yellen at her confirmation hearing on Tuesday said pandemic relief would take priority over tax increases, adding that the benefits of a relief package outweigh the expenses of a higher debt burden.
U.S. Treasury yields and the dollar fell, in the wake of Yellen's speech.
Joe Biden will be sworn in as the 46th president of the United States on Wednesday, with focus on his $1.9 trillion stimulus package plan and the pace of COVID-19 vaccine distribution.
Gold at $2,000 is still achievable "probably by the mid of second quarter, when a good amount of people get inoculated and there's so much cash in the system with demand almost coming back to normal," Howie Lee, an economist at OCBC Bank, said.
"People will start looking at inflation very closely then."
Silver rose 0.6% to $25.33 an ounce. Platinum climbed 0.7% to $1,090.85 and palladium gained 0.6% to $2,367.26.
(Reporting by Asha Sistla and Sumita Layek in Bengaluru. Editing by Jane Merriman) ((Asha.Sistla@thomsonreuters.com; If within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2808; Reuters Messaging: Reuters Messaging: email@example.com))