Gold reclaims $2,000/oz level on weaker dollar

Bengaluru — Gold rose over 1% to reclaim the key $2,000/oz level again on Tuesday as the dollar plunged to two-year low.

Spot gold rose 0.9% at $2,004.21/oz in New York, after hitting a one-week peak of $2,014.97. US gold futures settled up 0.7% at $2,013.1.

“People are watching the dollar index and its pretty alarming how its breaking down and we’re seeing all these hard assets like gold and silver rising up in tandem,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago. “We’re going to run back up to the all-time highs, we had a healthy correction in the gold market, a lot of people who jumped on the bear side of the market are going to end up reversing course.”

The dollar index hit its lowest since May 2018 and the benchmark 10-year US Treasury yields moved lower.

Gold reversed course from earlier in the session, when prices briefly turned negative after the benchmark S&P 500 index hit record highs.

Investors were now awaiting minutes from the Fed’s last meeting, due on Wednesday.

Bullion prices have surged 32% in 2020 as unprecedented global stimulus fuelled fears of inflation and currency debasement.

“We see yield of the real rates falling again, so there is an increase in inflation expectation probably related to the aggressive fiscal stimulus measures,” said UBS analyst Giovanni Staunovo.

Also helping gold, US treasury secretary Steven Mnuchin on Tuesday said President Donald Trump wants to move forward with more economic aid amid the coronavirus pandemic.

Among other metals, silver climbed 2.2% to $28.01/oz after rising as much as 3.8%. Platinum rose 1.1% to $960.39, while palladium eased 0.2% to $2,195.78.

Reuters