Gold rallies over $2,000 level on softer dollar, stimulus bets

Gold prices surged to an all-time peak above the $2,000 mark on the back of a weaker dollar and bets for more stimulus measures to revive a pandemic-ravaged economy.

Spot gold was trading 1.5 percent higher at $2,040.75 per ounce after hitting a record high of $2,041.78 earlier in the session. U.S. gold futures rose 1.8 percent to $2,044.25.

The United States has reported more than 4.7 million COVID-19 cases and over 157,000 deaths, putting the global infection cases tally at more than 18.41 million. Coronavirus cases continue to increase in the United States and a number of U.S. states have had to pause or roll back their reopening plans.

The rapid rise in cases has dented hopes of a swift U.S. economic rebound, sending investors into the safety of safe-haven assets, such as gold. The latest coronavirus relief package stalled in Congress, triggering speculation that stalemate over fiscal policy in Washington could leave the Federal Reserve with more to do.

Investors are counting on more spending in the United States, with White House negotiators promising to work with congressional Democrats to try to reach a deal on coronavirus relief by the end of this week.

Markets also wait for an Aug. 15 video conference where senior U.S. and Chinese officials are set to review a trade deal and likely air mutual grievances. On Tuesday, China’s U.S. envoy stated that Beijing does not want tensions to escalate.

The greenback against a basket of currencies traded 0.3 percent down at 92.95, having touched a low of 92.55 on Friday, its lowest since May 2018.

The long-term Treasury yields plunged after the president of Federal Reserve Bank of San Francisco stated that the U.S. economy will need more support than initially thought. The U.S. Treasury yields edged higher, with the benchmark 10-year note yield trading at 0.532 percent, having fallen to 0.505 percent in the prior session.