Gold prices extend gains on greenback weakness; US$2,000-mark eyed

[BENGALURU] Gold prices extended gains to inch closer to the US$2,000 mark on Tuesday as the US dollar weakened, with traders also focusing on minutes from the US Federal Reserve's last policy meeting set to release this week.

Spot gold rose 0.2 per cent to US$1,990.13 per ounce by 0351 GMT. US gold futures inched up 0.1 per cent to US$1,999.70.

Prices of the metal had jumped on Monday, with further impetus from Warren Buffett's Berkshire Hathaway buying a stake in major gold miner Barrick Gold Corp and retreating US Treasury yields.

On Tuesday, the US dollar fell 0.2 per cent to a more than one-week low, making gold cheaper for those holding other currencies.

Minutes from the Fed's last meeting, due on Wednesday, is also on investors' radar. "The FOMC (Federal Open Market Committee) will hold the key to plus US$2,000," said Stephen Innes, chief market strategist at financial services firm AxiCorp.

"Traders are getting the last kick at the can ahead of the FOMC minutes where the view is for the Fed to have talked about YCC (yields curve control) or inflation-targeting which is bad for the dollar and good for gold," Mr Innes added.

Massive global stimulus to combat the Covid-19 pandemic, fuelling fears of inflation and currency debasement, have helped gold climb more than 31 per cent this year.

While soft jewellery demand remains a risk, "the bull's case for gold remands intact in the long term, with real rates low and suppressed and which would be able to sustain the high price of gold", analysts at Phillip Futures said in a note.

Lower yields and interest rates decrease the opportunity cost of holding non-yielding assets such as gold.

Silver climbed 1.4 per cent to US$27.77 per ounce, and platinum rose 0.9 per cent to US$958.17. Palladium fell 1 per cent to US$2,176.75.

REUTERS