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Gold prices jumped more than $20 an ounce for their biggest one-day gain in a week, ahead of a Federal Reserve meeting on Wednesday and as lawmakers moved again to try and get Covid-19 relief through Congress after multiple failed attempts.

Gold for February delivery on New York’s Comex settled Tuesday’s trade up $23.20, or 1.3%, at $1,855.30 an ounce. In the previous session, it lost almost $11 to settle at a two-week low as a fiscal deal for the pandemic remained out of reach.

The spot price of gold, which algorithms and hedge funds use to decide the direction for futures, was up $27.40, or 1.5%, to $1,854.61 by 4:00 PM ET (21:00 GMT).

Gold rallied amid speculation that the Fed’s Federal Market Open Committee, or FOMC, will seize its last opportunity to tinker with monetary policy before the year ends.

Interest rate cuts aren’t expected to figure in the central bank’s policy decision for the December meeting as the Fed’s benchmark rate is already anchored near zero.

But the FOMC will likely be expanding the Fed’s buying $120 billion in bonds a month through quantitative easing, adjusting the maturity of those purchases, or providing “outcomes-based” guidelines it will need to see before tightening policy from its current historically loose level.

Gold also rose as U.S. House Speaker Nancy Pelosi said she has invited fellow congressional leaders to a meeting on Tuesday to try and strike a deal to fund the government and send out another round of COVID-19 relief.

Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer, as well as House Minority Leader Kevin McCarthy, were asked to attend the meeting as Congress was running out of time to avoid a government shutdown and send another round of aid to the US public.

CNBC, reporting on the meeting, said it would mark the most significant effort yet for the four leaders to come to a bipartisan agreement on a package that could get through a divided Congress.

Congress passed in March the Coronavirus Aid, Relief and Economic Security (CARES) Act dispensing $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.

In the past few months, however, Democrats and Republicans were locked in a bitter disagreement about a successive relief plan to the CARES Act. The stalemate appeared broken last week after a bipartisan group of Democrats and Republicans proposed a $908 billion relief bill, which led the two sides to resume negotiations.

On Monday, the bipartisan group proposed to split that $908 billion package into two: a $748 billion bill with new unemployment benefits, small business aid and other programs that have received broad support from both sides, and a second $160 billion bill of highly-contested liability protections for firms and aid for state and local governments. The second bill could end up falling out of the deal if the first goes through.

 

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