After putting on 25% in 2020, gold is in no mood to fritter away those increases. The merry run continues... Image Credit: Reuters

New York: Gold powered to the highest level in almost two months above $1,900 an ounce, aided by a weaker dollar, building on the biggest annual advance in a decade.

Silver also surged on the first full trading day of the new year, while platinum advanced to its priciest since 2016.

Bullion is rallying as a gauge of the US currency, now languishing at the lowest level since 2018 after sliding for three quarters. The gains in gold come even as US and global stocks are at all-time highs amid expectations that widespread vaccine distribution in 2021, further central bank support, and government aid will reignite growth and underpin better corporate profits.

Spot gold climbed as much as 1.4 per cent to $1,925.71 an ounce, the highest since November 9, and traded at $1,923.74 at 7:16am in London. In 2020, the precious metal rose 25 per cent. Silver rose as much as 2.9 per cent, and platinum hit $1,101.26 an ounce, the highest since 2016.

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Gold's recent climb has also been aided by renewed declines in US real yields, which boost the precious metal's allure. Real yields - the difference between nominal benchmark bond yields and the rate of inflation - were at -1.092 per cent last Friday, near last year's nadir.

"I see gold being pushed higher by lower real interest rates and higher inflation expectations," said Nicholas Frappell, global general manager at ABC Bullion. "The market is not looking for any signs of tightening should inflation pick up in the near term. Gold traditionally outperforms when real interest rates are low."

Political uncertainty and the build-up of tensions in Washington was also helping to support gold and silver, said Avtar Sandu, a senior manager for commodities at Phillip Futures Pte.