Gold hits near two-week high on weaker dollar, dovish Fed signals

Spot gold was up 0.4% at $1,971.68 per ounce by 0043 GMT, after hitting its highest since Aug. 19 at $1,976 in early Asian trade. However, gold is down nearly 0.2% so far this month.

August 31, 2020 / 07:40 AM IST

Gold prices rose on Monday to their highest level in nearly two weeks, as demand was boosted by a weaker dollar and the U.S. Federal Reserve's new policy framework suggested that interest rates would remain low for some time.

FUNDAMENTALS

- Spot gold was up 0.4% at $1,971.68 per ounce by 0043 GMT, after hitting its highest since Aug. 19 at $1,976 in early Asian trade. However, gold is down nearly 0.2% so far this month.

- U.S. gold futures rose 0.4% to $1,982.50.

- Last week, Fed Chairman Jerome Powell said the central bank would adopt an average inflation target, meaning rates are likely to stay low for longer.

Close

- Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

- The dollar index fell 0.2% and was on track for its fourth consecutive monthly decline.

- Asian shares notched a fresh two-year high as investors wagered monetary and fiscal policies globally would stay super stimulatory for a protracted period.

- Global coronavirus cases surged past 25 million on Sunday, according to a Reuters tally, as India marked a worldwide record for daily new cases in the COVID-19 pandemic.

- China's factory activity expanded at a slightly slower pace in August.

- Japan's factory output rose for a second straight month in July, while retail sales fell for a fifth straight month.

- Speculators reduced their bullish positions in COMEX gold and raised them in silver contracts in the week to Aug. 25.

- On the physical side, dealers in India offered the highest discounts on gold in five months last week as a dip in domestic prices failed to revive demand.

- Silver jumped 1.7% to $27.94 per ounce, platinum rose 0.4% to $935.06, and palladium gained 0.6% to $2,217.77.
Reuters
first published: Aug 31, 2020 07:34 am

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