Gold jumped to a three-week peak on Tuesday on expectations the Federal Reserve would not raise US interest rates soon and as the dollar traded close to its lowest in nearly eight months, though profit-taking chipped away at some recent gains. The US currency has been on the back foot since Fed Chair Janet Yellen last month doused expectations for hikes in US interest rates anytime soon, making dollar-priced commodities cheaper.
Lower rates underpin demand for non-interest-yielding bullion, while hurting the dollar. Spot gold rose to $1,259.66 an ounce early on Tuesday, its highest since March 18. However, it pared gains to trade down 0.2 percent at $1,255.40 an ounce by 0636 GMT, on profit-taking following a 1.4-percent overnight gain. US gold futures climbed to a three-week top of $1,261.90. "While policy uncertainty is supportive of gold, it is the currency markets that we look to, to wield the biggest influence on bullion," HSBC said in a note.
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