As attention shifts to the Fed minutes, gold gains on the weakening dollar

21 Nov 2023 , 10:10 AM

As investors await the minutes from the Federal Reserve’s most recent meeting for additional details on its interest rate forecast, gold prices increased on Tuesday, helped by a decline in the value of the US dollar and Treasury yields.

Spot gold was up 0.6% at $1,988.29 per ounce. To $1,990.10, U.S. gold futures increased by 0.5%.

Expecting U.S. interest rates to decline in the coming year, investors have been holding onto the dollar close to a 2-1/2-month low. Gold becomes more affordable for holders of foreign currencies as the dollar declines.

Typical The yield on the 10-year US Treasury was close to two-month lows reached last week.

The Fed’s most recent meeting’s minutes are due at 1900 GMT. The anticipation that interest rate hikes by the US central bank would be the last have increased due to indications of a slowdown in US inflation.

According to CME’s FedWatch Tool, markets are pricing in a larger than 50% possibility of a rate decrease of at least 25 basis points by May, despite the fact that they are mostly expecting the Fed to keep rates unchanged at its December meeting.

Holding gold has a lower opportunity cost when interest rates are lower.

Thomas Barkin, president of the Richmond Fed, said that inflation will likely stay ‘stubborn’ and require the Fed to maintain high interest rates for longer than investors think.

Palladium decreased by 0.2% to $1,076.26, platinum remained unchanged at $918.59, while spot silver increased by 1% to $23.64 per ounce.

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