Gold prices rose by 1.13 per cent on Tuesday supported by a struggling dollar and hopes the US Federal Reserve will not raise interest rates as soon as next week’s meeting.

Gold has benefitted with fairly low market expectations that the Fed will raise interest rates again next week after lifting them for the first time in nearly a decade in December.

Supporting bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped slightly on Friday, but stayed near the highest since September 2014 at 25.5 million ounces. Read More - Free Commodity Tips

During noon trade in the domestic market as tumbling equities amidst renewed fears over the health of the global economy spurred demand for safe haven assets.

Asian stocks slid the most in three weeks, oil fell as Japan’s economy contracted in the fourth quarter while China’s exports tumbled the most since May 2009 in February 2016, causing a flight from risky assets and bolstering the safe haven demand for the yellow metal.

Hopes of delayed further Fed rate hikes amidst Friday’s mixed US jobs data also bolstered the lure for the bullion as a store of value.

Speculation rose that the European Central Bank (ECB) will unleash further monetary easing measures to prop up the Euro area economic recovery, when it meets this Thursday, a move which could boost gold, a hedge against the inflationary risk of monetary stimulus. Meanwhile, traders weighed mixed US jobs data which showed a pickup in hiring in the month of February that was offset by a surprise dip in wages, raising doubts over the timing of the next US Federal Reserve interest rate hike after a maiden lift-off in almost a decade in December. Gold may rebound today as hopes of delayed further Fed rate hikes bolstered the lure for the bullion as a store of value.


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