PRECIOUS-Gold rises to two-week high as dollar stumbles

(Updates prices)
* Dollar hits more than two-year low
* Silver rises to three-week high
* Interactive graphic tracking global spread of coronavirus:
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By Brijesh Patel
Sept 1 (Reuters) - Gold prices rose on Tuesday to their
highest level in nearly two weeks, as the dollar slipped to
multi-year lows on bets that U.S. interest rates would stay
lower for longer under the Federal Reserve's new policy
framework.
Spot gold XAU= was up 0.8% at $1,985.64 per ounce by 0644
GMT, after hitting its highest since Aug. 19 at $1,989.42
earlier in the session. U.S. gold futures GCcv1 rose 0.8% to
$1,994.40.
"With the greenback expected to remain weak, we expect gold
to grind higher and revisit the $2,000 an ounce level
initially," said Jeffrey Halley, a senior market analyst at
OANDA.
The dollar index .DXY dropped to a more than two-year low
against its rivals, making gold cheaper for holders of other
currencies. USD/
The Fed's new monetary policy strategy, which could result
in inflation moving slightly higher and interest rates staying
lower for longer, has triggered a sell-off in the dollar,
driving inflows into safe-haven bullion. The U.S. central bank's new approach to monetary policy
means a low unemployment rate on its own doesn't warrant higher
interest rates, Fed Vice Chair Richard Clarida said on Monday.
"Expectations of lower for longer when it comes to U.S.
interest rates and continued weakness in the USD index are
setting a favourable environment for precious metals, especially
gold," ING analyst Warren Patterson said in a note.
Low interest rates reduce the opportunity cost of holding
non-yielding bullion, which is also used as a hedge against
inflation and currency depreciation.
The United States said on Monday it was establishing a new
bilateral economic dialogue with Taiwan, a decision that could
worsen relation between Washington and Beijing as China claims
Taiwan as its own territory. Elsewhere, silver XAG= was up 1.5% at $28.64 per ounce,
after hitting its highest since Aug. 11.
Platinum XPT= rose 1.4% to $942.69 and palladium XPD=
climbed 1.7% to $2,280.82.