Global gold prices turned higher after falling during these moments of trading on Monday, despite the rise of the US dollar, while investors await new evidence regarding the Federal Reserve’s interest rate cut.
The dollar index rose on Monday, hovering near a nearly two-month high hit last week. A stronger dollar makes bullion less attractive to holders of other currencies.
“The continued momentum of the US currency on the back of expectations of interest rate cuts has created a headwind for gold prices to rise,” said Tim Waterer, chief market analyst at KCM Trade.
Traders see about an 89% chance of the Fed cutting rates by 25 basis points at its November meeting, and an 11% chance of it keeping rates unchanged, according to the US Rate Tracker tool available on Investing Saudi Arabia.
This came after data released on Friday showed that the US producer price index was flat last month. According to the US Labor Department, annual inflation in producer prices slowed to a rate of increase of 1.8% in September from an upwardly revised reading of 1.9% in August, the slowest pace of increase since February.
Meanwhile, data from the University of Michigan revealed that the US consumer confidence index declined by 1.7% on a monthly basis to 68.9 points in the initial reading for October, compared to 70.1 points in September, and below the expected 70.9 points.
Gold, which does not carry a high yield, thrives in low interest rate environments as well as during periods of economic and geopolitical turmoil.
Meanwhile, investors will be watching comments from Federal Reserve officials this week for further hints on upcoming interest rate cuts, along with U.S. retail sales data.
“If Fed officials this week cast further doubt on how many rate cuts could occur between now and the end of the year, any resulting rally in the dollar could send gold testing the downside and testing support levels around $2,600 again,” Waterer said.
Gold at settlement on Friday
Gold futures extended early gains on Friday as markets digested economic data showing annual U.S. producer price inflation slowed, while consumer confidence fell.
At the settlement of trades, gold futures for December delivery rose by 1.4%, or $37, to $2,676.30 per ounce, with the yellow metal rising during the week by 0.3%.
Gold and dollar now
Spot gold is now up 0.27% at $2,664 per ounce.
US gold futures rose 0.20% to $2,681.
On the other hand, the dollar index contracts rose by 0.1% to 102.77 points.
Other minerals
Spot silver fell 1.3% to $31.1275 an ounce and platinum fell 1.2% to $972.90. Both metals snapped a two-session winning streak. Palladium extended its decline, falling 1.6% to $1,051.81.
