This post was originally published on this site
Gold futures rose to around a two-week peak on Tuesday, aided by weakness in the U.S. dollar that took the currency to its lowest level in about two years.
The Federal Reserve’s decision to alter its monetary-policy framework to allow for inflation to rise above, or below, its 2% annual target for longer periods, has weakened the dollar but provided more incentive for buyers of bullion who see gold as a inflation hedge, analysts say.
“The Fed’s decisions and the new inflation target opened space for a new rally for gold,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades, in a Tuesday report.
“After rebounding on the previous resistance level (and now support zone) at $1,920, bullion skyrocketed again to $1,990 as the greenback continues to weaken,” the analyst wrote
The gains for gold and other precious metals come even as stocks are mostly tilting higher to start September, a month that has historically been a weaker performer than others.
“Despite US indices continuing to rally, investors feel the need to increase the proportion of gold in their portfolio in case of new turbulence on both stocks and currencies markets,” De Casa wrote.
December gold GCZ20, +0.95% GC00, +0.95% rose $18.80, or 1%, at $1,997,40 an ounce, representing the highest closing level, if the metal holds here, since Aug. 18, according to FactSet data.
The most-active December silver contract SIZ20, +1.94% SI00, +1.94%, meanwhile, added 58 cents, or 2%, at $29.175 an ounce, following a 2.9% rise on Monday.
Commodity prices were on the rise as the U.S. dollar was off 0.4% at 91.825, as measured by the ICE U.S. Dollar Index DXY, -0.35%, a gauge of the buck against a half-dozen currencies. That level marks around the lowest level for the index since the spring of 2018.
