Gold prices rose on Tuesday as the dollar weakened and U.S. Treasury bond yields retreated on lingering uncertainty over when the Federal Reserve will reduce its economic stimulus program.
Gold fell almost 1 percent earlier in the session, then turned higher as speculators bought futures to cover their bearish bets ahead of Wednesday’s release of the minutes of the Fed’s July policy meeting.
Silver also recovered after initially tumbling 4 percent.
Traders said the uncertainty over when the U.S. central bank will taper its $85 billion in monthly bond purchases benefits gold, as bullion prices have already factored in the scaling back of stimulus from as early as September.
Spot gold was up 0.5 percent to $1,372, having previously hit a session low at $1,352.20, while U.S. gold futures for December delivery settled $6.90 higher at $1,372.50 an ounce.
The dollar index fell 0.4 percent, tracking a drop in U.S. Treasury yields and as investors chose safe haven currencies over the dollar in the uncertainty ahead of the release of the Fed minutes.