Gold futures on Tuesday headed higher and aimed for a second straight gain as investors awaited dovish statements from global central banks that are likely to support bullion buying in the midst of the global coronavirus pandemic, analysts said.
The Federal Reserve is slated to start its policy-setting meeting later Tuesday, while other policy decisions from Bank of England and the Bank of Japan will follow on Thursday.
Investors expect policy makers to promote a regime of low interest rates for a prolonged period to combat COVID-19, which could lift both gold and stocks further, commodity analysts forecast.
“Against this backdrop, these central banks will very likely convey a dovish message to the markets, which should mean higher stock and gold prices, everything else being equal,” wrote Fawad Razaqzada, market analyst at ThinkMarkets in a daily note.
“Indeed, gold, silver and copper prices have all extended their gains today as investors price in the prospects of low rates for longer from the Fed and other banks,” he said.
The analysts added that upbeat data from China, one of the largest importers of precious and industrial metals, may offer further momentum for that section of the commodity complex. Total retail sales of consumer goods grew 0.5% year-over-year last month, according to China’s National Bureau of Statistics.
December gold was up $14.70, or 0.8%, at $1,978.40 an ounce early Tuesday after a similar gain to start the week.
Meanwhile, December silver was advancing 40 cents, or 1.5%, at $27.755 an ounce, following a nearly 1.9% gain on Monday.