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Gold holds advance as commodities extend rebound, US dollar drops
[SINGAPORE] Gold held its gains as commodities extended their recovery after China said it will boost efforts to right the economy and the US dollar weakened.
Bullion for immediate delivery traded at US$1,268.03 an ounce by 9:26 am in Singapore, from US$1,267.33 on Monday when it rose 0.7 per cent , according to Bloomberg generic pricing. The metal is up 20 per cent this year and entered a bull market last week, with platinum and palladium following suit.
A gauge of the greenback dropped to a four-month low on Monday, while the Bloomberg Commodity Index climbed to the highest since Dec 9 as iron ore posted a record jump Monday and oil surged.
Meanwhile, Federal Reserve Governor Lael Brainard said the US economy isn't immune to global risks and called for careful adjustments to the policy rate to preserve the expansion.
Gold has benefited from haven demand amid wider market turmoil. The surge in other commodities is now another supporting factor, according to Bob Takai, chief executive officer and president of Sumitomo Corporation Global Research Co.
"This strength or recovery of the commodity market from a very miserable environment is definitely one of the big factors why gold and other precious metals are performing so well," he said by phone from Tokyo.
"Over the year going forward, there is very little expectation that the US interest rate is going to rise further," he said.
"The dollar's strength is capped at this level, and this is good news for precious metals."
Higher rates sap gold's allure as it doesn't pay interest, while a stronger US dollar makes the metal more expensive in other currencies.