Due to a weaker US dollar, gold is expected to rise for a second straight week

24 Nov 2023 , 10:39 AM

A lower US dollar helped gold prices rise on Friday, putting them on course for their second straight weekly increase as investors were more optimistic that the Federal Reserve would stop raising interest rates.

Spot gold was up 0.1% at $1,993.96 an ounce. This week, gold has gained 0.7% so far. Additionally, U.S. gold futures increased by 0.1% to $1,994.70.

Due to shortened trading hours later in the day and the fact that U.S. markets are closed on Thursday for the Thanksgiving holiday, trade is anticipated to be light.

The dollar index fell 0.2% compared to its competitors and was headed for a second weekly decline, which reduced the price of gold for holders of other currencies.

According to data released on Wednesday, fewer Americans than anticipated filed new claims for unemployment benefits last week; nonetheless, this is probably not going to alter the perception that the labour market is slowing down in response to rising interest rates. 

The Fed ‘carefully’ would proceed, according to earlier this week’s Fed minutes, and ‘all participants judged it appropriate to maintain’ the present rate setting.

Fed representatives decided to boost interest rates only in the event that efforts to control inflation failed.

Based on CME’s FedWatch Tool, traders are pricing in roughly a 26% likelihood of a rate cut as early as March, while they largely expect the Fed to keep rates constant in December.

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

October saw a modest increase in Japan’s core consumer price growth, following a month of easing. This strengthened investors’ belief that the Bank of Japan would soon be forced to reduce monetary support due to persistent inflation.

Platinum remained steady at $915.43, while spot silver increased 0.1% to $23.69 per ounce. An ounce of palladium now costs $1,047.28, up 0.1%.

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