Gold gains as dollar eases off four-week high

Gold prices rose on Tuesday, off a 1-1/2-month low hit in the previous session, as the dollar slipped and hopes for further global stimulus underpinned the safe-haven metal.

Spot gold rose 0.2% to $1,840.81 per ounce by 0226 GMT, recovering from its lowest since Dec. 2 at $1,809.90 hit on Monday.

US gold futures gained 0.5% to $1,839.40.

"The key factor appears to be the (US) currency. The movements in the US dollar have been the best predictor of gold market moves in recent days," said Michael McCarthy, chief market strategist at CMC Markets.

Making gold attractive for other currency holders, the dollar fell from a four-week high hit in the previous session.

Benchmark 10-year Treasury yields were range-bound, but held above 1%. Higher bond yields increase the opportunity cost of holding the non-interest yielding gold.

"Bond markets are clearly sitting on a change in conditions, and we might have seen the lows for interest rates for this cycle ... that will be the key consideration for gold traders this year," McCarthy said.

The next round of fiscal stimulus in the United States was also in focus with President-elect Joe Biden's $1.9 trillion stimulus package proposal to jump-start the virus-stricken economy. Biden is set to be inaugurated on Wednesday.

Euro zone finance ministers also pledged continued fiscal support for their economies and discussed the design of post-pandemic recovery plans.

Gold is considered a hedge against inflation and currency debasement, likely to result from large stimulus measures.

Among other precious metals, silver fell 0.5% to $25.21 an ounce. Platinum rose 1.5% to $1,095.74, while palladium climbed 0.2% to $2,376.93.