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Gold steadies near two-week high on sliding dollar

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Gold held steady near a two-week high on Tuesday as a weaker dollar and ultra-low interest rate environment kept demand solid for the safe-haven metal.

FUNDAMENTALS

Spot gold was little changed at $1,968.98 per ounce by 0041 GMT, after hitting its highest since Aug. 19 at $1,976.14 on Monday.

U.S. gold futures eased 0.1% to $1,975.80.

The dollar index held close to a more than two-year low against its rivals, making gold less expensive for holders of other currencies.

U.S. Federal Reserve Chairman Jerome Powell outlined an accommodative policy change last week that is believed could result in inflation moving slightly higher and interest rates staying lower for longer.

Fed Vice Chair Richard Clarida on Monday expanded on Powell’s comments saying that under the U.S. central bank’s new policy view, a low rate of unemployment does not on its own trigger higher interest rates.

Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

Asian stocks were set to weaken on Tuesday following a softer Wall Street close.

More than 25.38 million people have been reported to be infected by the novel coronavirus globally and 847,287 have died, according to a Reuters tally.

Market participants now await the release of China manufacturing data and an interest rate decision from the Australian central bank.

Meanwhile, Japan’s factory activity contracted at the slowest pace in six months in August.

Silver fell 0.2% to $28.17 per ounce, platinum rose 0.3% to $931.87, and palladium dropped 0.3% to $2,235.64.

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