Gold prices rose over 1 percent on Tuesday as bond yields eased and the dollar index moved lower on the back of increased risk appetite.
Spot gold climbed 1.1 percent to $1,702.29 an ounce, while U.S. gold futures were up 1.3 percent at $1,699.65.
The dollar backed away from 3-1/2 month highs after U.S. 10-year yields softened a little overnight.
Treasury yields stabilized and long-dated euro zone government bond yields dipped as investors react to the release of final gross domestic data for the bloc.
The euro zone economy contracted more than previously estimated in the last three months of 2020 sequentially as household consumption plunged because of Covid-19 lockdowns, revised data showed.
GDP fell by 0.7 percent quarter-on-quarter, more than the initial 0.6 percent estimate, Eurostat said. GDP contracted by 4.9 percent on a yearly basis in the fourth quarter.
Analysts expect that the ECB’s updated macroeconomic forecasts to be published on Thursday will likely show inflation still well below its 2 percent target in 2022-23.
Next week’s Federal Reserve policy meeting will be pored over for signs of change in its outlook for interest rates and its huge bond-buying scheme.
U.S. Treasury Secretary Janet Yellen said on Monday that President Biden’s coronavirus aid package would provide enough resources to fuel a “very strong” U.S. economic recovery, and that “there are tools” to address inflation if it becomes a problem.