LONDON: Gold rose to three-week highs on Tuesday as the dollar sank back to a near 8-month low, weighed down by expectations that the Federal Reserve will keep US interest rates lower for longer.
The US currency has been on the back foot since Fed Chair Janet Yellen last month doused expectations for near-term hikes in US interest rates, lifting dollar-priced assets, such as gold.
Spot gold touched a high of $1,262.60 an ounce before easing back to $1,258.26 by 1350 GMT, little changed from late on Monday. US gold futures for June delivery were up $2.60 an ounce at $1,260.60.
Silver also broke above $16 an ounce for the first time in nearly a month, peaking at a 5-1/2 month high of $16.19 before edging back to $16.07, up 1.2 per cent. The metal rose 3.6pc on Monday, its biggest one-day rise in over six months.
The bullion prices are being driven by the poor performance of the dollar and of stock markets, Afshin Nabavi, head of trading at MKS in Switzerland, said, with silver driving the market.
Among other precious metals, platinum was up 0.9pc at $996.97 an ounce and palladium was up 0.3pc at $546.66 an ounce.