Gold reaches 7-month high in early trade

29 Nov 2023 , 10:45 AM

Wednesday saw an almost seven-month high for gold prices, driven by a prolonged drop in the value of the US dollar and rising bond yields as investors became more optimistic about the likelihood of a rate decrease by the Federal Reserve by the first half of 2019.

Spot gold had increased by 0.3% to $2,047.21 an ounce.

December delivery U.S. gold futures increased 0.4% to $2,047.80 an ounce.

The dollar index fell to its lowest point in over three months compared to its peers, and it was expected to decrease by about 4% in November, marking its worst monthly performance in a year.

Gold becomes more affordable for holders of foreign currencies as the dollar declines.

The yield on 10-year Treasury notes dropped to a level below two months ago, 4.2860%.

On Tuesday, Fed Governor Christopher Waller, a well-known and powerful hawk at the central bank, hinted at the possibility of a rate decrease in the coming months, which fueled market predictions that U.S. rates have peaked.

According to CME’s FedWatch Tool, traders are pricing in a more than 70% possibility of an easing in May of next year, up from a 50% chance one day earlier, while they generally expect the U.S. central bank to keep rates in December.

The opportunity cost of owning non-interest bearing bullion is decreased by lower interest rates.

October’s lower-than-expected inflation in Australia is a result of declining goods prices, which supports the central bank’s decision to hold interest rates steady next week.

On the final day of a protracted six-day truce in the Gaza Strip conflict, Hamas and Israel were anticipated to free additional prisoners and hostages while speculation centred on whether mediator Qatar could arrange for another extension.

Spot platinum was stable at $939.83, while silver rose 0.4% to $25.09 per ounce. An ounce of palladium now costs $1,059.69, up 0.4%.

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