Gold Extends Yesterday's Surge As U.S. Dollar Sees Further Downside

(RTTNews) - Gold futures moved sharply higher during trading on Tuesday, extending the strong upward move seen in the previous session.

After jumping $46.90 or 1.5 percent to $3,228.90 an ounce during Monday's session, gold for May delivery surged $51.40 or 1.6 percent to $3280.30 an ounce.

The increase by the price of the precious metal came amid continued weakness in the value of the U.S. dollar, with the U.S. dollar index slipping by 0.3 percent.

The U.S. dollar index slid 0.7 percent on Monday after Moody's announced it has downgraded the U.S. debt rating by a notch to Aa1 from Aaa.

Moody's said the downgrade reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.

Meanwhile, two Federal Reserve officials signaled that interest rates are likely to remain on hold until at least September due to a murky economic outlook.

Fed Vice Chair Philip Jefferson backed a wait-and-see approach, citing uncertainty and warning against temporary price increases becoming sustained inflation.

Atlanta Fed President Raphael Bostic told CNBC that he's leaning toward just one quarter point rate cut this year, given concerns about rising inflation stoked by higher import taxes.