Gold prices jumped as much as 1 per cent yesterday, supported by a weaker dollar, as investors look to this week's US Federal Reserve meeting to pick up indicators on stimulus measures and inflation targets.
At the end of the trading session, spot gold was up 0.7 per cent at $1,955.60 an ounce, according to Reuters. U.S. futures rose 0.8 per cent to $1,963.70.
"The gold market is counting on the Fed's (policy)," said Stephen Innes, chief market strategist at AxiCorp, noting that the US central bank may not deviate from its current tone, but there is a strong belief within the market that it will be able to spark inflation. The dollar index fell 0.3 per cent against its competitors, with markets anticipating the announcement of the Board's policy tomorrow, reinforcing the attractiveness of the yellow metal to investors from other currencies. However, gold has been limited by investors' appetite for high-risk assets as hopes for a possible vaccine for Covid-19 return after the resumption of clinical trials.
Among other precious metals, the spot price of silver rose 1.6 per cent to $27.17 an ounce, platinum jumped 3.22 per cent to $954.80 an ounce, while palladium fell 0.76 per cent to $2,303.30 an ounce.
The dollar fell yesterday, against other major currencies, as a wave of M&A activity lifted global equity markets, as investors looked forward to a busy week with occasions including the US Federal Reserve meeting and the appointment of a new Prime Minister to Japan.
Attention was focused on sterling, where the currency rose 0.4 per cent against the dollar after suffering its worst week since March. The gains are partly due to the dollar's decline after two consecutive weeks. "There will be pressure on the Reserve Bank to support the new policy objectives with some action," said Lee Hardman, an analyst at Mitsubishi UFJ, noting that inflation is still well below target.
The euro rose to $1.186, while the yen climbed 0.13 per cent to around 105.9 yen, its highest level in five days.
