By Gina Lee
Investing.com – Gold was up on Tuesday morning in Asia, rallying from the near one-month low hit during the previous session. A slight pullback in the U.S. dollar and lower Treasury yields also gave the yellow metal a boost.
Gold futures were up 0.66% to $1,671.75 by 12:20 AM ET (4:20 AM GMT).
The dollar, which normally moves inversely to gold, was down on Tuesday but remained near the two-year high hit during the previous session. Benchmark U.S. 10-year Treasury yields also eased.
"Some tentative support has appeared in Asia as China eased foreign currency reserves for local banks and set a neutral USD/CNY fix to support the yuan," OANDA senior analyst Jeffrey Halley told Reuters, adding gold's stabilization looked very fragile.
The People’s Bank of China said it would step up monetary policy support to the real economy, especially to small firms hit by the COVID-19 pandemic, in response to a media question seeking comment on swings in the financial markets.
The central bank also cut the amount of money that banks need to have in reserve for their foreign currency holdings on Monday.
Elsewhere in Asia Pacific, the Bank of Japan will hand down its monetary policy decision on Thursday. The European Central Bank will also publish its economic bulletin on the same day.
Meanwhile, the war in Ukraine precipitated by the Russian invasion on Feb. 24 continues. While it warned that the risks of a nuclear war should not be underestimated, Russia said that it wanted to reduce those risks. Conventional Western weapons were legitimate targets in Ukraine, where battles continue in the east, Moscow added.
In other precious metals, silver rose 1%, platinum gained 0.6%, and palladium jumped 2.1% to $2,189.18.
Palladium recovered from a drop of almost 13% on Monday, with concerns that further COVID-19 lockdowns in key consumer China will reduce demand contributing to the fall. Like gold, the recovery in palladium looks fragile and an escalation of the COVID-19 situation in Beijing almost certainly sees a test of support at $2,025, said Halley.