Gold soared to a six-month high on Monday, buoyed by a weakened dollar and anticipation of a Federal Reserve pause in monetary tightening, solidifying its position above the crucial $2,000 an ounce threshold.
As of 3:01 p.m. ET (2001 GMT), spot gold exhibited a 0.5% increase, reaching $2,012.34 per ounce—the highest since May 16. Simultaneously, U.S. gold futures settled 0.5% higher at $2012.4.
The dollar, hovering near a three-month low, played a significant role in this surge by reducing the cost of greenback-priced gold for holders of other currencies.
According to Bob Haberkorn, Senior Market Strategist at RJO Futures, gold is expected to hover around the $2,000 mark until further guidance from the Federal Reserve regarding its interest rate plans. He remarked, “Gold will trade higher if they are done with rate hikes for the time being.”
Market sentiment aligns with this expectation, as traders widely anticipate the U.S. central bank to maintain rates in December. CME’s FedWatch Tool reflects a roughly 50-50 chance of easing in May next year. Lower interest rates, should they materialize, would decrease the opportunity cost of holding non-interest-bearing assets, thereby potentially boosting gold prices.
Investor focus shifts to critical economic indicators this week, with U.S. third-quarter GDP figures slated for Wednesday and the personal consumption expenditures (PCE) price index, the Fed‘s preferred inflation gauge, scheduled for Thursday. Kyle Rodda, a Financial Market Analyst at Capital.com, emphasized, “Economic figures coming out of the U.S. this week, both on the growth and inflation front, will make or break a case for whether gold remains above $2,000.”
On the physical front, recent data revealed a decline in China’s net gold imports via Hong Kong for the second consecutive month in October. This dip is attributed to a patchy economic recovery weighing on demand in the key bullion market.
In the broader precious metals landscape, silver experienced a notable 1.3% surge, reaching a nearly three-month high at $24.62 per ounce. Meanwhile, platinum retreated by 1.3% to $918.51, and palladium saw a marginal 0.2% decline at $1,071.32. The dynamics within the precious metals sector indicate a nuanced interplay of global economic factors influencing investor sentiment and market trends.
