Gold rises over 1% as Federal Reserve ramps up support measures

[BENGALURU] Gold prices rose on Tuesday, following a near 4 per cent jump in the previous session after the US Federal Reserve announced unprecedented measures to support an economy which is reeling from the coronavirus pandemic.

Spot gold climbed 1.7 per cent to US$1,578.83 per ounce by 0116 GMT. The metal rose 3.7 per cent on Monday, its highest percentage gain since June 2016.

US gold futures rose 1.6 per cent to US$1,592.20 per ounce. For the first time, the Fed will back purchases of corporate bonds, backstop direct loans to companies and will "soon" roll out a programme to get credit to small and medium-sized business.

Asian shares were set to rally as the US central bank pledged to help the economy from a fallout.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5 per cent in early trade.

President Donald Trump said on Monday he is considering how to reopen the US economy when a 15-day shutdown ends next week, even as the coronavirus spreads rapidly.

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A far-reaching virus economic stimulus package remained stalled in the US Senate on Monday as Democrats said it contained too little money for states and hospitals and not enough restrictions on a fund to help big businesses.

Global central banks also took various measures to mitigate the damage of the outbreak, with Australia's central bank proposing to buy US$2.35 billion in government bonds, while Germany agreed for a package worth up to US$808 billion.

Three of the world's largest gold refineries said on Monday they had suspended production in Switzerland for at least a week after local authorities ordered the closure of non-essential industry to curtail the spread of the virus.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.8 per cent to 923.99 tonnes on Monday.

Palladium surged 7.3 per cent to US$1,844.50 per ounce, while platinum rose 4.5 per cent to US$671.11 and silver jumped 5.4 per cent to US$13.97 per ounce.

REUTERS