Gold rises as the declining dollar increases the yellow metal’s attractiveness

Gold prices rallied on Tuesday as a weaker dollar yielded bullion in which is priced less expensively for overseas buyers, despite poor trading after the long Christmas weekend.

Gold was up 0.4% to $1,804.99 an ounce as of 05:46 GMT. US gold futures rose 0.4% to $1,811.90.

The dollar index fell 0.3%, according to Reuters.

Gold is up nearly $200 since falling to a more than two-year low in late September after expectations of a slower interest rate hikes by the Federal Reserve weakened the dollar’s appeal.

The US central bank reduced the pace of interest rate hikes to 50 basis points in December after four consecutive hikes of 75 basis points each.

However, its chairman, Jerome Powell, has indicated that the bank will hike interest rates further next year.

High interest reduces the attractiveness of gold and increases the opportunity cost of holding the yellow metal, which does not produce a return. Among other precious metals, silver was up 0.9% to $23.92, platinum was up 0.4% to $1025.36, while palladium settled at $1764.00 .

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