Gold extended gains after the Federal Reserve took unprecedented measures to shore up the U.S. economy, which has been hit by the spread of the coronavirus.
In a surprise announcement Monday, the U.S. central bank said it would buy unlimited amounts of Treasury bonds and mortgage-backed securities to keep borrowing costs at rock-bottom levels, aiding bullion which doesn’t offer interest. It also set up programs to ensure credit flows to corporations as well as state and local governments.
Investors are now waiting for U.S. lawmakers to deliver a fiscal stimulus package, which has so far failed to come together.
The traditional haven is seeing a resurgence after declining over the last two weeks as investors favored the dollar and sold the precious metal to raise cash amid the steep selloff in stocks. More and more countries are going into lockdown in efforts to contain the pandemic, which is already having a devastating effect on economies, spurring governments and central banks worldwide to implement more stimulus measures.
Spot gold climbed 0.9% to $1,567.42 an ounce, after a 3.6% jump on Monday.
Among the other main precious metals, silver, palladium and platinum all advanced more than 3%. The two platinum group metals are extending gains amid the broader rise in precious metals, and a report that South Africa will close its mines for 21 days as part of a nationwide lockdown may also be lifting sentiment. The country accounts for 75% of the world’s platinum and 38% of the palladium supply.