The spot price of gold reached $1,787.80 (£1,286) per ounce early on Tuesday morning, up 0.3% on where it rested at the close of play on Monday.
Yesterday, it rose 1% following the announcement of US Federal Reserve chairman Jerome Powell’s testimony to Congress today.
Gold chase is on
As the US dollar fell back, the appeal of gold strengthened after a good showing in Asia, where the yuan consolidated, with the spot market rate opening at 6.4640 yuan per dollar.
With gold less expensive for investors holding other currencies, the US Dollar Index dropped from a two-month high against the competition. Powell, who will address Congress this afternoon, UK time, has already said that the US economy is recovering from the ravages inflicted upon it by coronavirus but has noted the downside of increased inflation.
The Federal Reserve chairman is known to view gold as sensible leverage against higher inflation.
Commenting on the rise in gold prices following a drop in the value of the US dollar, Phillip Streible, chief market strategist at Blue Line Futures in Chicago, was reported by CNBC as saying: “People are using the correction to buy gold, at these price levels, there is value to hold positions in gold, especially for the long run.”
Streible’s comments reflect the bullish approach taken by John Williams, president of the Federal Reserve Bank of New York, who on Monday said: “It’s clear that the economy is improving at a rapid rate, and the medium-term outlook is very good.
“But the data and conditions have not progressed enough for the Federal Open Market Committee to shift its monetary policy stance of strong support for the economic recovery.”