Gold Recovers On Monetary Stimulus Expectations

London: Gold rose on Wednesday, recovering from its lowest in nearly two weeks, as prospects for further economic stimulus helped to bolster investor appetite whil the dollar remained flat.

Accommodative monetary policies favour gold as well as equities because low interest rates encourage investors to opt for assets that do not rely on interest yields.

Spot gold was up 0.5 per cent at $1,338.55 an ounce by 0957 GMT (3:27 p.m. in India), having earlier touched $1,327.30, its lowest since July 1. Bullion had fallen by 1.7 per cent on Tuesday, its biggest one-day drop since May 24.

US gold rose 0.6 per cent to $1,341.60.

"Gold prices can continue to benefit from an uncertain economic picture for the UK and Europe after the Brexit vote and also from any quantitative easing, which also means low interest rates," Natixis analyst Bernard Dahdah said.

Gold has gained about $100 an ounce since Britain voted to leave the European Union, with worried investors piling their cash into safe-haven assets.

Asian and European shares came within reach of testing their 2016 peak on Wednesday, also bolstered by prospects of economic stimulus.

The dollar, in which gold is priced, was unchanged against a basket of six currencies.

After five weeks of gains, gold has come under some pressure following strong US non-farm payrolls data on Friday.

But despite better than expected jobs data, the Federal Reserve should be in no rush to raise interest rates, two senior Fed officials said.

A price of $1,330 could be a very good entry point for people who have been bullish but hesitant of chasing prices, said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.63 per cent to 965.22 tonnes on Tuesday, its biggest one-day decline since December 2.

Among other precious metals, palladium touched an eight-month high of $644 an ounce.

Platinum, which fell for the first time in two weeks in the previous session, rebounded 0.2 per cent to $1,088.20.

Silver, meanwhile, gained 1.1 per cent to $20.33.

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