Bengaluru — Gold prices rose on Tuesday, off a one and a half-month low hit in the previous session, as the dollar slipped and hopes for further global stimulus underpinned the safe-haven metal.
Spot gold rose 0.2% to $1,840.81 an ounce by 2.26am GMT, recovering from its lowest since December 2 at $1,809.90 hit on Monday. US gold futures gained 0.5% to $1,839.40.
“The key factor appears to be the US currency. The movements in the US dollar have been the best predictor of gold market moves in recent days,” said Michael McCarthy, chief market strategist at CMC Markets.
Making gold attractive for other currency holders, the dollar fell from a four-week high hit in the previous session. Benchmark 10-year treasury yields were rangebound, but held above 1%. Higher bond yields increase the opportunity cost of holding the non-interest yielding gold.
“Bond markets are clearly sitting on a change in conditions, and we might have seen the lows for interest rates for this cycle. That will be the key consideration for gold traders this year,” McCarthy said.
The next round of fiscal stimulus in the US was also in focus with president-elect Joe Biden’s $1.9-trillion stimulus package proposal to jump-start the virus-stricken economy. Biden is set to be inaugurated on Wednesday. Eurozone finance ministers also pledged continued fiscal support for their economies and discussed the design of post-pandemic recovery plans.
Gold is considered a hedge against inflation and currency debasement, likely to result from large stimulus measures.
Global coronavirus cases stood near 95-million with several countries still under tight restrictions and a tepid pace of vaccinations.
Among other precious metals, silver fell 0.5% to $25.21 an ounce. Platinum rose 1.5% to $1,095.74, while palladium climbed 0.2% to $2,376.93.