Gold maintains its profits and slightly rises today due to demand from China.

Gold prices saw a marginal increase during trading on Tuesday, as the yellow metal retained its gains from the previous session, continuing to trade near its highest levels in over two weeks ahead of the upcoming U.S. inflation data tomorrow.

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In terms of trading, spot gold prices rose by 0.20% to record $2,669.85 per ounce, while gold futures for December delivery remained stable at $2,686.80 per ounce, increasing by just over a dollar.

What Influenced Gold Prices Today?

The limited rise in gold prices today was mainly driven by expectations of continued strong demand for the yellow metal, following the announcement by the People's Bank of China yesterday to resume gold purchases for the first time after a six-month hiatus, aimed at boosting its gold reserves as the world's largest consumer of the metal.

This came after Chinese authorities pledged yesterday morning to increase financial and monetary stimulus for the Chinese economy in the coming year, which boosted investor sentiment regarding the recovery of demand for gold used in China's industrial sector.

On the other hand, there was continued investor interest in gold as a safe haven amid the recent escalations in geopolitical tensions in the Middle East, along with political unrest in Europe, especially as investors prepared for the highly significant inflation data release in the United States tomorrow.

However, gold gains remained limited today as the U.S. dollar continued to extend its gains, which increased the cost of holding bullion priced in greenbacks for investors holding other currencies. Additionally, investors also turned to U.S. Treasury bonds over gold, with yields on the benchmark 10-year Treasury bond reaching 4.210% amid continued increases.