* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Gold extends bull run, fast approaching $2,000
* Dollar near 2-year lows, breaks major chart supports
* Shares take comfort in endless stimulus, Fed policies
By Wayne Cole
SYDNEY, July 28 (Reuters) - Gold rocketed to record peaks at
$1,975 on Tuesday while the U.S. dollar plumbed two-year lows as
investors wagered the Federal Reserve would reaffirm its
super-easy policy outlook this week, and a tolerance for higher
inflation.
The prospect of endless stimulus allowed Asian shares to
shake off coronavirus concerns and Sino-U.S. tensions to make
early gains.
Nations around the globe are announcing new travel curbs
amid a fresh wave of the coronavirus, a setback to hopes for a
"V" shaped economic recovery. Yet investors are taking comfort from the prospect of yet
more fiscal spending and endless cheap liquidity, with Fed Chair
Jerome Powell expected to sound reassuringly accommodative after
a policy meeting on Wednesday.
"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.
All of which helped MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS add 1.2%, while Japan's
Nikkei .N225 firmed 0.6% even as the yen rose.
E-Mini futures for the S&P 500 ESc1 gained 0.4%, while
EUROSTOXX 50 futures STXEc1 added 0.5%.
The Dow .DJI had ended Monday up 0.43%, while the S&P 500
.SPX gained 0.74% and the Nasdaq .IXIC 1.67%.
The 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 =USD .DXY . It in turn breached major
chart support around 93.96/88, a bearish development that opens
to way to at least 93.19 and 92.24.
The euro EUR= was up at $1.1766, having hit its highest
since late 2008 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 skidded to a four-month trough at 105.10 JPY= .
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.
Gold flew to $1,975 an ounce XAU= on Tuesday having
climbed $160 in just six sessions. Silver XAG= put on another
5% to reach $25.81, its highest since April 2013, and a gain of
almost 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 20 cents to $43.61 a
barrel, while U.S. crude CLc1 firmed 12 cents to $41.72.
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Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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(Reporting Wayne Cole; editing by Richard Pullin)