Gold steady on weak dollar; stocks surge as US government shutdown ends

In the Mumbai bullion market, the yellow metal saw a gain of rs 19 in prices to Rs 38,450 per 10 gram of 24-carat gold (plus 3 percent GST), on the back of festive demand. (Image: Reuters)

Gold prices held steady on Tuesday, as the dollar pared some losses but remained near a 3-year low amid a surge in global equities after a U.S. government shutdown came to an end.

FUNDAMENTALS

* Spot gold was little changed at $1,334.36 an ounce by 0111 GMT.

* U.S. gold futures were up 0.2 percent at $1,333.90.

* Congress voted on Monday to end a three-day U.S. government shutdown, approving another short-term funding bill as Democrats accepted promises from Republicans for a broad debate later on the future of young illegal immigrants.

* Asian stocks advanced on Tuesday after U.S. senators struck a deal to end the government shutdown, sending Wall Street's main indexes to record highs.

* Market participants await the outcome of the European Central Bank's meeting on Thursday for possible clues to future shifts in the bank's monetary policy.

* The ECB is unlikely to ditch a pledge to keep buying bonds as rate setters need more time to assess the outlook for the economy and the euro, three sources close to the matter have said.

* Investors also await a Bank of Japan policy announcement on Tuesday. Analysts do not expect Japan to signal any policy shift.

* The idea of other major central banks moving closer to more normal policies has been a key headwind for the dollar.

* Such moves would change the interest rate dynamics of the past few years, when the U.S. Federal Reserve was the only central bank raising rates.

* The dollar's index against a basket of major currencies stood at 90.322, not far off its three-year low of 90.113 touched on Jan. 17.

* Spot gold has risen about $100 from nearly five-month lows hit in mid-December, mainly due to weakness in the U.S. dollar. Analysts have warned that the dollar weakness could have been overdone, which could lead to short-term correction in gold.

* A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

* Russia raised gold holdings in December, according to IMF data.

* Swiss-based commodities fund Tiberius Group plans to make a foray into cryptocurrencies with the launch of what may be the first digital money underpinned by physically deliverable metals including industrials such as aluminium and copper.

* The World Gold Council (WGC) is studying the creation of a global standard for gold kilobars so they can be deployed as collateral in futures markets and potentially encourage demand, sources close to the matter said.