Gold Price Today Gold Rate Rises On Fed Stimulus Measures, Dollar Weakness Amid COVID-19 Crisis

Gold Price Rises On US Central Bank Stimulus Measures

US gold futures gained 0.6% to $1,737 per ounce

Gold rose on Tuesday supported by a weaker dollar as well as the Federal Reserve’s announcement of details of a plan to start buying corporate debt to revive the country’s economy. Spot gold rose 0.3 per cent to $1,729.05 per ounce by 2:54 pm, after falling more than 1 per cent before the US central bank announcement on Monday. US gold futures gained 0.6 per cent to $1,737 per ounce.

“The massive increase in liquidity by not only the Fed but other central banks pumping much money into the market is helping gold,” said Commerzbank analyst Daniel Briesemann.

“We see gold rise towards $1,800 in the second half of the year driven by the massive increase in liquidity by the central banks which should lead to currency devaluation.”

The US central bank said it would start purchasing corporate bonds in the secondary market corporate credit facility, boosting interest in riskier assets that sent global stocks higher and weighed on the US dollar.

Fed Chairman Jerome Powell is due to testify before the Senate Banking Committee later in the day.

The Bank of Japan said it expected to pump around 110 trillion yen ($1 trillion) into the economy via its market operations and lending facilities.

Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.

Global cases of the novel coronavirus reached more than 8 million on Monday, as infections surged in Latin America and the United States while China is grappling with new outbreaks.

“Increasing infections imply economic weakness, need for continued further economic (fiscal and monetary support), which are all supportive of gold,” said National Australia Bank economist John Sharma.

Palladium climbed 2.6 per cent to $1,956.62 per ounce, having earlier hit its highest level since June 10 at $1,965.21. Platinum rose 0.7 per cent to $817.30, having dipped to a one-month low on Monday. Silver eased 0.2 per cent to $17.40.

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