* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Gold runs into profit-taking after meteoric rise
* Dollar steadies near 2-year lows, breaks major chart
support
* Shares take comfort in endless stimulus, Fed policy
By Wayne Cole
SYDNEY, July 28 (Reuters) - Gold hurtled to record peaks on
Tuesday before the sheer scale of its gains drew a burst of
profit taking, which in turn helped the dollar from two-year
lows and curbed early equity gains.
The precious metal had stormed almost $40 higher at one
point to reach $1,980 an ounce XAU= , only for a wave of
selling to slap it back to $1,940 in wild trade.
Gold is still up over $125 in little more than a week as
investors wager the Federal Reserve will reaffirm its super-easy
policies at its meeting this week, and perhaps signal a
tolerance for higher inflation in the long-run.
"Fed officials have made clear that they will be making
their forward guidance more dovish and outcome-based soon,"
wrote analysts at TD Securities.
"The chairman is likely to continue the process of prepping
markets for changes when he speaks at his press conference."
One shift could be to average inflation targeting, which
would see the Fed aim to push inflation above its 2% target to
make up for years of under-shooting.
The pullback in gold took some steam out of stocks but
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was still up 0.8%.
Japan's Nikkei .N225 went flat, while Chinese blue chips
put on 0.7% .CSI300 . E-Mini futures for the S&P 500 ESc1
edged up 0.1%, while EUROSTOXX 50 futures STXEc1 added 0.1%
and FTSE futures FFIc1 0.3%.
The Dow .DJI had ended Monday up 0.43%, while the S&P 500
.SPX gained 0.74% and the Nasdaq .IXIC 1.67%.
That rise was again led by technology stocks as investors
wagered on upbeat earnings reports due this week. Analysts also
noted the falling dollar was a positive given that more than 40%
of S&P 500 earnings come from abroad.
DOLLAR IN DECLINE
There were hopes some sort of stimulus extension could be
hammered out as U.S. Senate Republicans raced to complete
details of a $1 trillion coronavirus aid proposal before
enhanced unemployment benefits expire on Friday.
The proposal could involve a cut in benefits to $200 from
$600, which would be a big blow to household incomes and
spending power. Aid is desperately needed given 30 million Americans are out
of work and states are tightening social restrictions again, a
trend that has also dragged on the U.S. dollar.
Alan Ruskin, head of G10 strategy at Deutsche Bank, noted
currencies had been tracking the relative performance of their
economies, so that high-ranked economic performance was
associated with stronger currencies.
"One clear pattern is how economies linked most tightly to
China - including commodity producers as diverse as Australia,
Chile and Brazil - have tended to perform better than economies
most directly linked to the U.S., notably its NAFTA trading
partners," said Ruskin.
Indeed, the dollar has been falling almost across the board
in recent days, reaching a two-year trough on a basket of
currencies at 93.416 before steadying at 93.793 =USD .DXY .
The euro EUR= stood at $1.1732, having hit its highest in
two years at $1.1781, while the dollar touched its lowest
against the Swiss franc since mid-2015 CHF= .
The story was much the same against the Japanese yen, as the
dollar touched a four-month trough at 105.10 JPY= before last
trading at 105.60.
The trend reversal in the dollar combined with all the
uncertainty over COVID-19 and the prevalence of negative real
bond yields to light a fire under precious metals.
Silver XAG= shot as far as $26.16 at one point, the
highest since April 2013, and a gain of a third in seven
sessions. GOL/
Oil prices also tend to benefit from a falling dollar but
have been hampered by worries about demand as countries impose
more travel restrictions. O/R
Brent crude LCOc1 futures edged up 4 cents to $43.45 a
barrel, while U.S. crude CLc1 eased 9 cents to $41.51.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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(Reporting Wayne Cole; Editing by Richard Pullin and Sam
Holmes)