Gold ticks up on weaker dollar; solid US manufacturing data caps gains

(Reuters) - Gold prices edged higher on Wednesday as the dollar weakened, although upbeat U.S. manufacturing data lifted hopes about global economic recovery and curbed demand for the safe-haven metal.

 

FUNDAMENTALS

Spot gold was up 0.1% at $1,971.07 per ounce by 0032 GMT, after hitting its highest since Aug. 19 at $1,991.91 on Tuesday.

U.S. gold futures were steady at $1,978.90.

The dollar index held close to a more than two-year low on bets that U.S. interest rates would stay low for longer under the new monetary policy approach from the Federal Reserve.

The U.S. central bank would need to roll out more stimulus to fulfil its new promise of stronger job growth and higher inflation, Fed Governor Lael Brainard said on Tuesday.

Low interest rates reduce the opportunity cost of holding non-yielding bullion, which is also used as a hedge against inflation and currency debasement.

Senate Republicans are likely to take up their COVID-19 relief bill next week offering $500 billion in additional federal aid, White House chief of staff Mark Meadows said.

Meanwhile, U.S. manufacturing activity accelerated to a nearly two-year high in August amid a surge in new orders.

Asian shares were set gain on Wednesday, encouraged by buoyant U.S. moves that followed stronger-than-expected manufacturing indicators.

More than 25.61 million people have been reported to be infected by the novel coronavirus globally and 851,300​ have died, according to a Reuters tally.

Silver gained 0.3% to $28.25 per ounce, platinum rose 0.3% to $943.63, and palladium climbed 0.2% to $2,276.83.

 

(Reporting by Brijesh Patel in Bengaluru)