 "Gold scales two-week high as dollar slips on fiscal stimulus optimism")
By Sumita Layek
(Reuters) - Gold rose to a two-week high on Thursday as the dollar eased on hopes of further stimulus under the Joe Biden administration, although bullion's gains were limited by some profit booking.
Spot gold was up 0.1% at $1,872.25 per ounce by 0308 GMT, after hitting its highest since Jan. 8 at $1,872.35 earlier in the session. Bullion had gained 1.7% on Wednesday.
U.S. gold futures climbed 0.3% to $1,871.70.
"The path of least resistance is lower. There is a lot of stimulus coming down and that's likely to boost inflation expectations and growth," said DailyFX currency strategist Ilya Spivak.
But, in that scenario, the Federal Reserve will look to hold back on policy support and probably start thinking about unwinding current policy measures, which will boost the dollar and undermine the value of gold, he added.
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U.S. President Joe Biden's $1.9 trillion stimulus plan will be in focus as he gears up to jump-start his government's response to the COVID-19 pandemic, which has claimed more than 400,000 lives and upended the world's largest economy.
Bullion is considered a hedge against inflation that can result from stimulus measures.
The dollar nursed losses against rival currencies and the benchmark 10-year U.S. Treasury yields held below the 10-month peak scaled last week.
"I suspect Treasury yields will dictate the direction of travel for the yellow metal and the rally could extend if further inflation expectations kick in," Stephen Innes, chief global market strategist at Axi, said in a note.
Market participants are also keeping a close tab on the European Central Bank monetary policy decision due at 1245 GMT.
Silver rose 0.3% to $25.89 an ounce. Platinum eased 0.4% to $1,105.05, while palladium gained 0.5% to $2,382.88.
(Reporting by Sumita Layek in Bengaluru; Editing by Subhranshu Sahu)
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