Bengaluru — Gold prices extended gains to inch closer to the $2,000 mark on Tuesday as the dollar weakened, with traders also focusing on minutes from the US Federal Reserve’s last policy meeting set to be released this week.
Spot gold rose 0.2% to $1,990.13 an ounce by 3.50am GMT. US gold futures edged up 0.1% to $1,999.70. Prices of the metal had jumped on Monday, with further impetus from Warren Buffett’s Berkshire Hathaway buying a stake in gold miner Barrick Gold and retreating US Treasury yields.
On Tuesday, the dollar fell 0.2% to a more than one-week low, making gold cheaper for those holding other currencies. Minutes from the Fed’s last meeting, due on Wednesday, is also on investors’ radar.
“The FOMC [Federal open market committee] will hold the key to plus $2,000,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
“Traders are getting the last kick at the can ahead of the FOMC minutes where the view is for the Fed to have talked about YCC [yields curve control] or inflation-targeting which is bad for the dollar and good for gold,” Innes said.
Huge global stimulus to combat the Covid-19 pandemic, fuelling fears of inflation and currency debasement, have helped gold climb more than 31% this year.
While soft jewellery demand remains a risk, “the bull’s case for gold is intact in the long term, with real rates low and suppressed and which would be able to sustain the high price of gold,” analysts at Phillip Futures said in a note.
Lower yields and interest rates decrease the opportunity cost of holding nonyielding assets such as gold.
Silver climbed 1.4% to $27.77 an ounce, platinum rose 0.9% to $958.17 and palladium fell 1% to $2,176.75.