Gold hits 2-month peak on prospect of Democratic win in Georgia

An employee arranges one kilogram gold bars for a photograph at the YLG Bullion International headquarters in Bangkok, Thailand, on Jan. 13, 2016.

Gold prices hit a fresh two-month high on Wednesday as the dollar slid on growing expectations of a Democratic win in the U.S. Senate run-off election in Georgia, which would likely lead to additional fiscal stimulus.

The markets have been anticipating that by its moves higher in the last few days," said Ross Norman, an independent analyst, referring to U.S President-elect Joe Biden.

Democrats took the lead in runoff votes that will determine control of the U.S. Senate and possibly pave the way for a big spending administration under Biden.

The dollar index fell to fresh 2-1/2-year lows, making bullion cheaper for other currency holders.

The Fed might decide to unleash more monetary stimulus once it has a clearer picture on how the U.S. Congress turns out, said Howie Lee, an economist at OCBC Bank.

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