Gold futures on the COMEX division of the New York Mercantile Exchange rose Tuesday, as traders hoped the U.S. Federal Reserve Bank would approve new economic stimulus measures at this week’s meeting, while a lower dollar supported trading.
The most active gold contract for December delivery gained 3.1 dollars, or 0.18 percent, to settle at 1,734.9 dollars per ounce.
After falling moderately in the previous session, gold reversed course and edged up Tuesday, supported by expectations that the Fed could announce another round of quantitative easing measures at the end of a two-day policy meeting on Thursday.
The gold trade rallied more than three percent last week on hopes that the Fed would approve new economic stimulus measures to combat recent weakness in the U.S. economy. Quantitative easing policies support gold, as the precious metal traditionally rises on fears of inflation.
Also supporting gold was a positive outside market atmosphere, with gains in the Dow Jones Industrial Average and crude oil. A lower dollar also helped the gold trade, as a weaker greenback supports commodities by making them less expensive to holders of other currencies.
The dollar dropped following a warning from Moody’s Investors Service that the United States could possibly lose its triple-A credit rating on government debt by next year. Moody’s announcement could additionally have given gold some safe haven flows on the session, as investors are usually drawn to the precious metal during economic hardship or uncertainty.