Gold prices recovered to some extent on Tuesday, climbing above the $4,000-per-ounce mark due to a weaker dollar and anticipation of further Federal Reserve rate reductions overriding the stresses of indications of a thaw in U.S.-China trade tensions.
Spot gold increased by 0.7 percent to peak at $4,009.39 per ounce, as at 0141 GMT, following a decline of over 3 percent on Monday to its lowest mark since October 10.
U.S. gold futures for December increased by 0.1 percent to 4,022. 10 per ounce.
KCM Trade Chief Market Analyst, Tim Waterer, said that “Buyers who were waiting on the sidelines for gold are now being tempted into taking positions at these price levels. Also, we are seeing a bit of softness from the dollar, which is giving gold a reprieve.”
The dollar index plummeted 0.1 percent relative to its competitors, and thus gold became cheaper to other currency holders.
Chinese and U.S economic officials on Sunday have worked out the outline of a trade agreement for U.S. President Donald Trump and his Chinese counterpart Xi Jinping to finalize later this week.
Trump believed that a deal would be made with China, and declared a frenzy of deals on trade and strategic minerals in Malaysia with four countries in Southeast Asia during the first stop of his five-day Asia trip.
Waterer stated that “If Trump and Xi have a productive meeting on trade this week, this could leave gold swimming against the current to some degree. But this could be offset if the Fed delivers a dovish tone with the expected rate cut this week.”
As the Fed is broadly anticipated to lower interest rates at the conclusion of its policy meeting on Wednesday, investors are anticipating any forward-looking language by Fed Chair Jerome Powell.
However, both the European Central Bank and the Bank of Japan are widely expected to keep rates unchanged later in the week.
Geopolitical and economic uncertainties, until now, have contributed to a gain of approximately 53 percent in gold prices in the year, as the price of gold reached a new all-time high of $4,381.21 on October 20, supported by rate-cut bets and ongoing central bank purchasing.
Meanwhile, spot silver rose 0.3 percent to $46.74 per ounce, platinum slipped 1.2 percent to $1,571.85, and palladium dipped 0.8 percent to $1,391.15.
