Gold prices surged after falling as much as 5.2 percent in the previous session, as hopes of more U.S. stimulus measures to cushion the impact of rising COVID-19 cases nudged investors towards the precious metal.
Spot gold rose 1.5 percent to $1,889.30 per ounce by 0713 GMT, having hit a low of $1850.53 on Monday, its lowest since September 28. The safe-haven metal rose as high as $1,865.57 the day before but turned lower following the announcement from U.S. drugmaker Pfizer Inc. U.S. gold futures were up 1.8 percent at $1,886.80.
U.S. drugmaker Pfizer Inc and German partner BioNTech SE said a large-scale clinical trial showed their vaccine was more than 90 percent effective in preventing COVID-19. The vaccine news comes as the global tally of COVID-19 infections reached 50.68 million on Monday, stoking worries of more lockdown measures across the globe.
The prospects of a Biden presidency have boosted risk sentiment, although U.S. President Donald Trump's campaign on Monday filed a lawsuit in a Pennsylvania federal court, seeking to block state officials from certifying President-elect Joe Biden's victory in the state.
U.S. Senate Mitch McConnell said President Donald Trump was within his rights to look into irregularities from the election.
On Monday, Dallas Federal Reserve Bank President Robert Kaplan said the U.S. economy is rebounding from a deep contraction, but the resurgence of COVID-19 poses downside risks. Meanwhile, Cleveland Federal Reserve Bank President Loretta Mester said the emergency lending programs the Fed set up during the coronavirus pandemic are still needed.
The U.S. Treasury yields eased, with the benchmark 10-year note yield trading at 0.913 percent and the 30-year yield at 1.682 percent. The greenback against a basket of currencies traded flat at 92.70, having touched a low of 92.13 on Monday, its lowest since September 1.
