Gold approaches $2000 barrier ahead of Fed minutes

Gold prices rallied in European trade on Tuesday to a two-week high, almost touching the $2000 barrier as the dollar and US yields lost ground.

The gains come ahead of the Federal Reserve's meeting minutes, expected to shed light on the likely path ahead for US monetary policies. 

Gold Prices Today

Gold prices rose 0.2% to $1,994 an ounce, the highest since November 6, with a session-low at $1,977, after closing down 0.15% on Monday, following a heavy profit last week. 

The Dollar

The dollar index fell 0.3% on Tuesday, sharpening losses for the third straight session and plumbing a three-month trough at 103.18 against a basket of major rivals. 

Such losses came as traders sell off the dollar amid improving risk appetite, with investors expecting the Fed to have wrapped up the current cycle of policy tightening.

US Yields 

US 10-year treasury yields fell 1% on Tuesday on track for another loss, almost hitting two-month lows at 4.381% and buoying non-yielding assets. 

Such developments came as investors fully expect the Federal Reserve to hold interest rates unchanged at the December meeting.

Fed Minutes 

Investors now await the Federal Reserve's policy meeting later today, at which the Fed held interest rates flat at 5.5%, already the highest since 2001.

Such a decision was the third of its kind in the last four meetings, and a strong sign that the US policy tightening cycle has ended. 

Fed Chair Jerome Powell said the FOMC remains committed to bring inflation towards 2%, and admitted the road to achieve such a target will be difficult and long.

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at a total of 883.43 tonnes, the highest since September 11.