Sep 15, 2010
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Gold Coins
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Gold Coins
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Gold Coins
Some signs that the U.S. economic recovery would be stalling in recent weeks has triggered talk in financial markets of further easing. That has hurt the dollar's exchange rate against other major currencies and helped boost gold -- also used as a hedge against inflation, which is often triggered by ultra-loose monetary policy. Spot gold surged more than two percent to a record $1,274.75 an ounce in the previous session, its biggest one-day gain in four months.
U.S. short-term rates remained steady at low levels on Tuesday, anchored by the Fed's determination to keep rates down, making gold attractive.
"Uncertainty in the market prompted investors to buy safe-haven gold, as speculation the Federal Reserve would turn to quantitative easing as early as November weighed on sentiment," ANZ said in a note.
"The dollar also took a hit against other currencies, encouraging investors to turn to alternative safe-haven assets."
Investor unease can be seen in the higher holdings of the SPDR Gold Trust.
