Gold retreats below $2,000 while the dollar stops declining

22 Nov 2023 , 10:05 AM

While the dollar recovered from its recent decline, gold managed to stay below the crucial $2,000 mark on Wednesday. However, bullion prices were supported by views that the U.S. Federal Reserve has completed its tightening cycle.

Spot gold was down 0.1% at $1,996.79 per ounce, having reached a three-week high of $2,007.29 in the morning trade. 

After plunging to a more than two and a half-month low in the previous session, the dollar remained stable compared to its competitors. Gold becomes more affordable for holders of foreign currencies as the dollar declines.

The minutes of the October 31–November 1 policy meeting revealed that Fed officials decided to proceed ‘carefully’ and only raise interest rates if progress in reining in inflation stalled.

According to CME’s FedWatch Tool, markets are pricing in a roughly 60% 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 constant in December.

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

According to data released on Tuesday, October saw the lowest level of existing home sales in the United States in over 13 years as a result of both a lack of available homes and the highest mortgage rates in 20 years.

Benchmark US 10-year Treasury yields, meanwhile, continued to hover around a two-month low. 

According to customs figures released on Tuesday, gold exports from Switzerland reached their highest point since May in October due to a spike in delivery to India during the country’s festival season.

Platinum dropped 0.3% to $931.34 while spot silver increased 0.3% to $23.79 per ounce. Palladium dropped to $1,072.35 an ounce, a 0.6% decrease.

For feedback and suggestions, write to us at [e-mail]