Gold reaches a six-month high on dollar weakness and expectations of a slowdown in Fed rate hikes

28 Nov 2023 , 10:56 AM

Tuesday saw a six-month high for gold prices, driven up by hopes that the U.S. Federal Reserve’s cycle of interest rate hikes will halt and hold yields and the currency in check.

Spot gold had increased by 0.1% to $2,015.65 an ounce.

December delivery U.S. gold futures increased 0.2% to $2,016.10 an ounce.

Compared to its competitors, the dollar index hit a nearly three-month low, which reduced the price of gold for holders of other currencies.

The yield on 10-year Treasury notes was close to 4.3630%, a two-month low.

The market is now anticipating PCE data, the Fed’s favoured inflation gauge, on Thursday, which might heighten anticipation that the Fed may start easing monetary conditions sooner than anticipated. Recent data has shown hints of falling inflation in the U.S.

According to CME’s FedWatch Tool, traders largely anticipate that the US Federal Reserve will maintain rates in December and factor in a 50/50 possibility of doing so in May of the following year.

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

Leading customer Data released on Monday indicated that October saw a decline in China’s net imports of gold through Hong Kong for the second straight month as demand in the important bullion market was affected by a patchy economic recovery.

In the meantime, an Israel-Hamas truce in the Gaza Strip entered its fifth day as both parties fulfilled their agreement to release Israeli hostages and Palestinians under detention while also appearing ready to release others.

Spot platinum increased by 0.1% to $919.70 per ounce, while silver rose 0.1% to $24.65. An ounce of palladium now costs $1,068.94, up 0.1%.

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