NEW YORK: Gold prices rose over 1% to a one-month peak on Thursday as the dollar spiralled lower on hopes of more coronavirus relief aid and the US Federal Reserve’s pledge to funnel more cash and keep interest rates low.

Spot gold jumped 1.2% to $1,885.76 per ounce at 11:40 a.m. EST (1640 GMT), having hit a one-month high of $1,895.81 earlier in the session. US gold futures were up 1.9% at $1,894.

“A combination of an additional stimulus package along with additional bond buying and asset purchases from the Fed has clearly driven gold and silver prices higher,” said David Meger, director of metals trading at High Ridge Futures.

An additional stimulus relief package is weighing on the dollar due to more money being pumped into the supply, Meger added.

Lawmakers sought to hammer out a $900 billion COVID-19 aid bill with a Friday deadline to avert a government shutdown looming, buoying gold prices and sending the dollar to a multiyear trough.

With interest rates anchored at zero, the Fed vowed to keep pumping cash into financial markets until the US economy’s recovery is secure.

“The gold market seems to be solely focused on the fact that there’s a stimulus deal and that we’re getting close to it,” said Bob Haberkorn, senior market strategist at RJO Futures, adding that the markets are expecting some progress by the weekend.

Bullion, considered a hedge against inflation, has risen over 24% so far this year amid the unprecedented stimulus unleashed globally.

Raising concerns over the US economy’s recovery, the number of Americans filing first-time claims for jobless benefits unexpectedly rose last week as mounting COVID-19 infections battered business operations.

The Bank of England kept its stimulus programme unchanged as it awaited the outcome of Britain’s trade deal talks with the European Union.

In other metals, silver rose 1.9% to $25.82 an ounce. Platinum gained 0.9% to $1,043.98 and palladium was up 0.9% at $2,346.83.