Gold rose to its highest in nearly two weeks on Tuesday, propelled by a softer dollar and expectations the Federal Reserve will reinforce its accommodative monetary policy. Spot gold was up 0.4 per cent at $1,964.34 per ounce at 0931 GMT (3:01 pm in India), having earlier climbed to its highest since September 2 at $1,968.80 per ounce. US gold futures rose 0.6 per cent to $1,975.20 per ounce.
“The dollar weakness is playing its part but also some anticipation of continued support from the FOMC (Federal Open Market Committee) that has helped the market,” said Saxo Bank analyst Ole Hansen, adding that gold lacked an immediate catalyst to push it higher.
The dollar index fell, making gold less attractive for buyers holding other currencies, as participants awaited the Fed’s two-day policy event ending on Wednesday.
While the “most dovish scenario of the US Fed is already reflected in the price of gold”, the central bank’s guidance on how long it could keep rates low and average inflation forecasts are crucial, said ABN Amro analyst Georgette Boele.
US Treasury Secretary Steven Mnuchin and Fed Chair Jerome Powell will testify before the Senate Banking Committee on coronavirus relief, the committee said on Monday.
Unprecedented monetary stimulus packages and a low interest rate environment have led bullion to gain 29.5 per cent so far this year and scale record highs above $2,000 an ounce, since it is considered a hedge against possible inflation and currency debasement.
“The fact that gold prices remain below $2,000 even though the dollar has been under pressure in recent weeks is a signal of fatigue… ETF (exchange traded fund) positions are at extreme levels and speculators seem hesitant to increase substantially their positions,” ABN Amro’s Ms Boele said.
Elsewhere, platinum rose 0.6 per cent to $960.03 per ounce, after hitting its highest since August 18 at $968.
Silver gained 0.9 per cent to $27.40 per ounce and palladium was up 0.6 per cent at $2,327.50.