LONDON: Gold edged higher on Tuesday supported by an easing dollar as well as the US Federal Reserve’s announcement of details of a plan to start buying corporate bonds to revive the country’s economy. Spot gold rose 0.2 per cent to $1,727.33 per ounce by 1110 GMT, after falling more than 1pc before the Fed announcement on Monday. US gold futures gained 0.6pc to $1,737.50.

“The massive increase in liquidity by not only the Fed but other central banks pumping much money into the market is helping gold,” said Commerzbank analyst Daniel Briese­mann. “We see gold rise towards $1,800 in the second half of the year driven by the massive increase in liquidity by the central banks which should lead to currency devaluation.”

The US central bank said it would start purchasing corporate bonds in the secondary market, driving global stocks higher and weighing on the US dollar. Fed Chairman Jerome Powell is due to testify before the Senate Banking Committee later in the day.

The Bank of Japan said it expected to pump around 110 trillion yen ($1tr) into the economy via its market operations and lending facilities. Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.

Gold’s recovery to $1,730 shows the resilience of bullion in the current uncertain scenario, ActivTrades chief analyst Carlo Alberto De Casa said in a note. “Every time the price falls, it seems that investors are seeing it as a buying opportunity.”

Palladium climbed 2.1pc to $1,947.76 per ounce, having earlier hit its highest since June 10 at $1,965.21, while platinum dipped 0.3pc to $809.07. Silver fell 0.5pc to $17.35.

Published in Dawn, June 17th, 2020