Gold rises as the dollar’s decline enhances the attractiveness of the yellow metal

Gold prices rose on Tuesday, as a weaker dollar made bullion in which it is priced less expensive for overseas buyers despite thin trading after the long Christmas weekend.

Gold rose 0.4 percent to $1,804.99 an ounce at 0546 GMT. US gold futures rose 0.4 percent to $1,811.90.

The dollar index fell 0.3 percent.

Gold has risen nearly $200 since falling to its lowest level in more than two years in late September, after expectations of a slower pace of interest rate hikes by the Federal Reserve weakened the dollar’s appeal.

The US central bank cut the pace of interest rate hikes to 50 basis points in December, after four consecutive increases of 75 basis points each. However, its chairman, Jerome Powell, has indicated that the bank will raise interest rates further next year.

The high interest reduces the attractiveness of gold and increases the opportunity cost of holding the yellow metal, which does not yield a return.

In terms of other precious metals, silver rose 0.9 percent to $23.92, platinum rose 0.4 percent to $1025.36, while palladium settled at $1764.00.