Gold surged to a six-month high on Monday, bolstered by a weaker dollar and growing anticipation of a Federal Reserve pause in monetary tightening.
Bullion successfully held its ground above the crucial $2,000 an ounce mark, reflecting positive sentiment among investors.
Gold Soars to Six-Month High at $2,012.34
As of 3:01 p.m. ET (2001 GMT), spot gold was up 0.5%, reaching $2,012.34 per ounce—its highest level since May 16. Simultaneously, U.S. gold futures settled 0.5% higher at $2012.4. The softening dollar, hovering near a three-month low, played a pivotal role, making gold more affordable for holders of other currencies.
Bob Haberkorn, Senior Market Strategist at RJO Futures, commented on the current trend, stating, “Gold is likely to trade around $2,000 for a little bit until we get some more information from the Fed on its plan on interest rates. Gold will trade higher if they are done with rate hikes for the time being.”
Market analysts widely anticipate the Federal Reserve to maintain interest rates in December. The CME’s FedWatch Tool suggests a roughly 50-50 chance of easing in May next year. Lower interest rates tend to reduce the opportunity cost of holding non-interest-bearing assets, creating a favorable environment for gold prices.
Gold Hits Six-Month High Amid Dollar Softness
Investor focus in the coming days will center around the U.S. third-quarter GDP figures scheduled for Wednesday and the personal consumption expenditures (PCE) price index due on Thursday—the Fed’s preferred inflation gauge.
Kyle Rodda, a financial market analyst at Capital.com, emphasized the significance of these economic indicators, stating, “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, data revealed that China, a top consumer, experienced a decline in net gold imports via Hong Kong for a second consecutive month in October. The patchy economic recovery in the key bullion market contributed to this dip in demand.
Silver, responding to the positive sentiment in the precious metals market, surged 1.3% to nearly a three-month high at $24.62 per ounce. However, platinum experienced a 1.3% decline, settling at $918.51, and palladium was down 0.2% at $1,071.32.
In summary, gold’s ascent to a six-month high is driven by a combination of factors, including a softer dollar and market expectations of a Federal Reserve pause in monetary tightening. As investors await key economic indicators and Fed decisions, the trajectory of gold prices in the coming weeks will be closely monitored.