Treasury rates and gold prices rise as the dollar weakens

21 Dec 2023 , 10:20 AM

With traders anticipating the release of U.S. inflation statistics for November on Friday, which is expected to provide additional insight into the Federal Reserve’s monetary policy outlook, gold prices saw a slight increase on Thursday, supported by a weaker dollar and lower Treasury yields.

Spot gold was up 0.2% at $2,033.92 an ounce. US gold futures decreased little to $2,045.70.

On Wednesday, benchmark U.S. 10-year bond yields dropped to a level not seen in nearly two years, following a November decline in British inflation to its lowest level in over a year.

Due to the dollar’s 0.1% decline versus its competitors, gold became more affordable for holders of other currencies.

Due to the Fed’s recent dovish stance, traders have pencilled in multiple rate cuts for 2024, beginning as early as March.

Fed representatives have now refuted the notion of sharp rate reductions in the upcoming year.

Patrick Harker, the president of the Philadelphia Fed, stated that while he is opposed to more rate hikes by central banks, he is open to reducing short-term borrowing costs, albeit not anytime soon.

The opportunity cost of owning non-yielding bullion is reduced by lower interest rates.

The Fed’s favourite indicator of underlying inflation, the November core personal consumption expenditure (PCE) index report, is currently the focus of attention.

U.S. existing home sales surprisingly increased in November, according to data released on Wednesday. In December, U.S. consumer confidence rose beyond forecast due to positive outlook for the job market.

The largest exchange-traded fund backed by gold in the world, SPDR Gold Trust, said that its holdings increased by 0.07% to 878.25 tonnes on Wednesday.

Spot silver increased by 0.4% to $24.20 per ounce, while palladium increased by 0.7% to $1,204.15 and platinum increased by 0.2% to $960.52.

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