Picture: 123RF/Phawat Khommai
Picture: 123RF/Phawat Khommai

Bengaluru — Gold rose 2% on Tuesday, extending gains from a near 4% surge in the previous session, after the US Federal Reserve’s unprecedented measures to help an economy reeling from the coronavirus pandemic halted a rush for cash.

Spot gold rose 1.3% to $1,573.17 an ounce by 3.33am GMT. The metal rose 3.7% on Monday, its highest percentage gain since June 2016.

US gold futures rose 1.5% to $1,590.50.

“Gold is surging higher after the Fed went above and beyond in unveiling measures to support the economy,” said Edward Moya, a senior market analyst at broker Oanda.

The US central bank on Monday rolled out an extraordinary array of programmes and will lend against student loans, credit card loans and US government backed-loans to small businesses. That failed to push Wall Street higher on Monday, but it was enough to drive a rebound in Asian shares.

Meanwhile, a coronavirus economic stimulus package remained stalled in the US Senate on Monday as legislators haggled over its provisions, but the US treasury secretary voiced confidence a deal would be reached soon.

“The US Senate setback seems only temporary and gold traders are feeling pretty confident that at the end of the week, massive fiscal and monetary stimulus should help calm markets. If market volatility stabilises somewhat, gold will resume its safe-haven status,” said Oanda’s Moya.

President Donald Trump said on Monday he is considering how to reopen the US economy when a 15-day shutdown ends next week, even as the virus spreads rapidly.

Global central banks took various measures to mitigate the damage of the outbreak, which has infected 351,300 and killed 15,300 people globally.

Australia’s central bank proposed to buy $2.35bn in government bonds and Germany agreed for a package worth up to $808bn. 

Also propping up bullion markets was the closure of three of the world’s largest gold refineries in Switzerland due to the outbreak that has squeezed supply of the physical metal, Stephen Innes, chief market strategist at financial services firm AxiCorp, said in a note.

“There is just not enough around to support the underlying promissory notes (paper gold). It’s a godsend for bullion investors,” he said.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.8% to 923.99 tonnes on Monday. Palladium surged 7% to $1,840.03 an ounce, silver jumped 5.1% to $13.92 and platinum rose 2.5% to $658.23 an ounce.

Reuters