Gold rises as dollar tepid ahead of Trump-Biden debate

Gold prices edged up on Tuesday as the US dollar retreated from a two-month high, with investors looking forward to the first US presidential debate and developments on a new US coronavirus relief bill.

Spot gold rose 0.1 per cent to $1,883.51 per ounce by 0313 GMT. Prices rose 1.1 per cent in the previous session, its biggest one-day gain since late August.

US gold futures were up 0.3 per cent at $1,888.40. The dollar index was tepid, drifting away from a two-month high of 94.745 reached last week.

A weaker dollar makes gold cheaper for holders of other currencies.

"The dollar's decline has helped gold as the correlation remains relatively strong," said Howie Lee, an economist at OCBC Bank, pointing also to prospects of further fiscal stimulus in the United States.

"If that bill gets passed before the November elections, I think that will help risk sentiment. Gold may be pushed higher by virtue of the dollar weakening and heightened inflation expectations."

US House of Representatives Speaker Nancy Pelosi said on Monday that Democratic lawmakers unveiled $2.2 trillion relief bill. But it wasn't specified when there would be a vote on the proposal.

Gold, viewed as a hedge against inflation and currency debasement, has risen over 20 per cent this year, mainly supported by unprecedented stimulus measures by governments and central banks worldwide to revive their coronavirus-battered economies.

Caution had also set in ahead of the US presidential debate between President Donald Trump and Democratic nominee Joe Biden, with five weeks to go until the November 3 general election.

"The debates could carry its bag of uncertainties," Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note, adding the debate could be key to direction of precious metals in the short-term. Elsewhere, silver eased 0.2 per cent to $23.66 per ounce, platinum rose 0.1 per cent to $879.94 and palladium gained 0.4 per cent to $2,263.23.