Gold rises amid bets on lowering US interest rates

Gold prices rose on Tuesday during weak trading due to the Christmas holiday and in light of the decline in the dollar and bond yields due to growing expectations that the Federal Reserve (the US central bank) will cut interest rates in March.

Gold in instant transactions rose 0.5 percent to $2,063.78 per ounce by 0401 GMT, after recording the highest level in more than two weeks at $2,070.39 in the previous session. US gold futures rose 0.3 percent to $2,074.90 an ounce.

Lower interest rates would reduce the opportunity cost of holding non-yielding bullion.

Traders now expect an 89 percent chance of an interest rate cut by the US central bank in March, according to the CME Fed Watch tool.

The dollar index fell 0.1 percent, making gold more attractive to holders of other currencies, while the benchmark ten-year US bond yield fell to 3.8838 percent.

The US military launched precise retaliatory air strikes in Iraq after a bomb-laden drone attack on Monday by militants allied with Iran, which resulted in the injury of three American soldiers.

Gold is seen as a safe-haven asset in times of geopolitical uncertainty.

Markets in Australia, New Zealand, Hong Kong and the euro zone are closed on Tuesday for the Christmas holiday.

Regarding other precious metals, silver rose in spot transactions 0.8 percent to $24.37 per ounce, platinum increased 0.2 percent to $972.85, and palladium rose 0.6 percent to $1,209.74.