* SPDR Gold Trust holdings rise 0.4% on Monday
* Silver hits near four-year peak
* Dollar drops to over 4-month low
(Adds chart, updates prices)
By Brijesh Patel
July 21 (Reuters) - Gold rose to a nine-year high on Tuesday
as expectation of higher inflation from increased stimulus
overshadowed the resultant gain in risk appetite, while silver
breached the $20 level for the first time since September 2016.
Spot gold XAU= was up 0.4% at $1,822.11 per ounce by 0730
GMT after hitting its highest since September 2011. U.S. gold
futures GCcv1 rose 0.4% to $1,823.80.
"What's really driving the gold market is stimulus and we
are going to get more of it. It's the eye candy that's driving
sentiment right now," said Stephen Innes, chief market
strategist at financial services firm AxiCorp.
Gold tends to benefit from widespread stimulus as the metal
is widely viewed as a hedge against rising prices and currency
debasement. Analysts are, however, divided on the outlook for
inflation.
European Union leaders reached a deal on a massive stimulus
plan for their coronavirus-blighted economies after a fractious
summit that went through the night and into its fifth day.
In the United States too, congressional Republicans
announced plans to seek another $1 trillion in economic relief.
Along with stimulus, growing hopes for COVID-19 vaccines
boosted riskier assets. MKTS/GLOB
However, rising coronavirus cases in the United States and
elsewhere have added to doubts over a global economic recovery,
driving flows into safe-haven assets and helping gold gain about
20% so far this year. Further helping gold, the dollar .DXY fell to a more than
four-month low versus major currencies. USD/
Silver XAG= jumped 2.2% to $20.33, its highest since
August 2016.
"Silver is starting to outperform gold here. On the one
hand, it's obviously appreciating on the basis of increased
appeal for precious metals," IG Markets analyst Kyle Rodda said.
"On top of that, there's likely to be an element of silver
catching a bit on a rebound in global industrial activity."
Palladium XPD= rose 1% to $2,075.54 per ounce, while
platinum XPT= was steady at $843.92.
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