Gold gains after Fed ramps up support measures

Spot gold was up 0.1 per cent at $1,726.04 per ounce by 0504 GMT, after falling more than 1 per cent on Monday. - Reuters

Bengaluru - Equities rally, dollar stalls after Fed's announcement.

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By Brijesh Patel

Published: Tue 16 Jun 2020, 9:27 AM

Last updated: Tue 16 Jun 2020, 12:46 PM

Gold rose on Tuesday after the US Federal Reserve widened its programme of buying corporate debt to combat the financial toll of the pandemic as worries grow about a second wave of coronavirus infections.
Spot gold was up 0.1 per cent at $1,726.04 per ounce by 0504 GMT, after falling more than 1 per cent on Monday. US gold futures rose 0.4 per cent to $1,733.90.
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"The Fed pushing ahead with further stimulus measures, including these corporate bonds, indicates that this type of monetary easing is going to continue for some time," said ANZ analyst Daniel Hynes.
"There are enough concerns around economic outlook to keep investor demand for gold pretty solid."
Improving risk sentiment could, however, curtail additional investor appetite for gold, Hynes added.
Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.
The Fed said it will start purchasing corporate bonds on Tuesday in the secondary market, sparking a risk-on move that sent global stocks higher and weighed on theUS dollar.
The Bank of Japan said it expects to pump around 110 trillion yen ($1 trillion) into the economy via its market operations and lending facilities.
Global cases of the novel coronavirus reached over 8 million on Monday, as infections surge in Latin America and the United States and China grapples with fresh 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.
Elsewhere, palladium climbed 2.3 per cent to $1,950.62 per ounce and platinum jumped 1.1 per cent to $820.49, having dipped to a one-month low on Monday.
Silver fell 0.6 per cent to $17.33, but held above last session's near three-week low. - Reuters

Brijesh Patel

Published: Tue 16 Jun 2020, 9:27 AM

Last updated: Tue 16 Jun 2020, 12:46 PM

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