LONDON: Gold jumped more than 2% to its highest in nearly one week on Monday as a weaker dollar and a pull-back in US Treasury yields, coupled with dismal economic data from the New York Federal Reserve, bolstered demand for safe-haven bullion.
Spot gold climbed 2.17% to $1,985.85 an ounce by 11:32 am EDT (1514 GMT) and US gold futures rose 2.25% to $1,993.70.
"We had the manufacturing activity by the NY Fed show a very sharp drop that shows less economic activity on the manufacturing front and Warren Buffett's Berkshire Hathaway is buying gold mining stocks," said Bob Haberkorn, senior market strategist at RJO Futures.
The New York Fed's Empire State business conditions index fell to 3.7 in August versus July's 17.2 and compared to a forecast of 15.
Gold investors got a boost after a regulatory filing disclosed Berkshire Hathaway's new 20.9 million share investment in one of the world's largest mining companies, Barrick Gold Corp.
Investors were anticipating the minutes on Wednesday from the Fed's last policy meeting.
"The market expects the Fed to be very supportive, we'll be above $2,000 per ounce before Wednesday's Fed minutes, and north of $2,250 by the end of year," Haberkorn said.
The dollar was at a more than one-week low and a dip in benchmark 10-year US Treasury note yields also lifted gold prices on Monday.
Gold last week registered its biggest decline since March as investors reassessed positions after bullion retreated from a record peak of $2,072.50 scaled on Aug. 7.
"Considering, we still expect real rates to eventually resume their fall, should headwinds shift to tailwinds, we could see precious metals resume their upward trajectory with a substantial amount of strength," TD Securities said in a note.
In other precious metals, silver rose 3.3% to $27.29 an ounce, platinum gained 1.3% to $947.69 and palladium jumped 3.3% to $2,177.92.
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