Investing.com - Gold rose to rose to the highest level in three weeks on Tuesday as the dollar remained weaker on the back of expectations that the Federal Reserve will stick to a cautious approach on tightening monetary policy.
U.S. gold futures for June delivery touched highs of $1,264.6 the most since March 22 and were last at $1,262.8.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, edged down to 93.95, not far from Monday’s trough of 93.74, the lowest level since October.
The dollar has weakened across the board after recent dovish comments by Federal Reserve Chair Janet Yellen prompted investors to push back expectations on the timing of the next interest rate increase.
The dollar showed little reaction to comments from Dallas Fed President Robert Kaplan, who said Monday he is "very open-minded" to deciding whether to raise rates at the bank’s June meeting, but ruled out an April rate hike.
An increase in interest rates would boost the greenback by making it more attractive to yield-seeking investors, while weighing on gold by making it more expensive for holders of other currencies.
Gold has gained more than 19% so far this year, as market turmoil sparked from steep falls in China’s stock markets and currency and fears about the health of Europe’s banking sector bolstered investor appetite for bullion and other safe haven assets, including the yen.
Elsewhere in metals trading, U.S. silver futures for May delivery rose 0.9% to $16.09 an ounce. Copper for May delivery was up 0.74% to $2.106 a pound.