On Tuesday, gold surged past the $2,000 mark, propelled by market expectations that the Federal Reserve may have reached an interest rate peak. The optimism stemmed from the minutes of the central bank’s recent meeting, which indicated a cautious approach to further rate hikes.
At 2:30 p.m. ET (1930 GMT), spot gold recorded a 1.2% gain, reaching $1,999.92 per ounce. Earlier in the day, it touched a three-week peak at $2,007.29. Simultaneously, U.S. gold futures settled 1.1% higher at $2,001.60.
“Bulls are gorging themselves on gold ahead of the Thanksgiving holiday,” noted Tai Wong, an independent metals trader based in New York.
The Federal Reserve’s minutes revealed a consensus among officials that interest rates would only need to move higher “if” incoming information demonstrated insufficient progress in lowering inflation. Wong cautioned that while the minutes signal a cautious stance, bond and gold enthusiasts should not overindulge just yet.
The dollar dipped to more than a 2-1/2-month low, making gold more attractively priced for holders of other currencies. Concurrently, the benchmark U.S. 10-year Treasury yields hovered near two-month lows reached the previous week.
Bob Haberkorn, senior market strategist at RJO Futures, commented, “It doesn’t look like there’s going to be any more interest rate hikes here coming up on the horizon, so that’s bullish for gold.”
Anticipations of a slowdown in U.S. inflation have contributed to the perception that the Federal Reserve may be scaling back on rate hikes. Lower interest rates diminish the opportunity cost of holding gold.
Commerzbank noted, “Now that concerns about the conflict in the Middle East have abated noticeably, the U.S. interest rate outlook has regained the upper hand for gold.”
In tandem with gold’s rise, spot silver experienced a 1.9% increase, reaching $23.85 per ounce in its best day in a week. Platinum also gained 2%, hitting a three-week high at $936.51, while palladium showed a modest 0.1% increase, reaching $1,078.56.
Last week, the Silver Institute projected a third consecutive year of supply deficit in the global silver market for 2023.
