Gold surged for the fourth consecutive session on Tuesday, reaching a more than six-month high, buoyed by a weakening dollar and growing anticipation that the U.S. Federal Reserve has concluded its interest rate hikes.
As of 3:00 p.m. ET (2000 GMT), spot gold recorded a substantial gain of 1.4%, reaching $2,041.55 per ounce, marking its highest level since May 10. Simultaneously, U.S. gold futures for December delivery settled 1.4% higher at $2,040.
The current bullish momentum for gold is attributed to the ongoing downtrend in the dollar index, fueled by expectations that the Federal Reserve is poised to keep interest rates steady and may even contemplate rate cuts by spring, according to Jim Wyckoff, senior analyst at Kitco Metals.
Wyckoff, while expressing optimism about the near-term outlook for gold, cautioned that stronger-than-expected U.S. GDP numbers and inflation indicators could temper traders’ enthusiasm for bullion. The Federal Reserve seems increasingly inclined to maintain interest rates without further increases and may wait before considering any rate cuts. Lower interest rates diminish the opportunity cost associated with holding non-interest-bearing assets like gold.
Federal Reserve Governor Christopher Waller’s affirmation that policy is appropriately positioned has contributed to gold’s appeal. The weakening dollar index, touching its lowest level since mid-August, also rendered bullion less expensive for foreign buyers.
Investors are closely monitoring Thursday’s release of U.S. Personal Consumption Expenditures (PCE) data, the Fed‘s preferred inflation gauge. Additionally, attention is focused on Wednesday’s unveiling of the revised U.S. third-quarter GDP figures.
Lukman Otunuga, senior research analyst at FXTM, highlighted a sense of caution in the market ahead of a busy week for global financial markets, further supporting gold’s upward trajectory. Despite gold facing resistance at the $2,000 level, Otunuga emphasized the potential for a dip without a compelling fundamental catalyst.
In the broader precious metals market, silver recorded a 1.4% rise, reaching $24.97 per ounce, while platinum experienced a 2.3% increase, reaching $939.80. Conversely, palladium declined by 1.4%, settling at $1,055.59 per ounce.
