Gold prices continued their remarkable gains during trading today, Wednesday, despite the rise in the dollar index, as prices were supported by data that showed a slowdown in inflation in the United States, reinforcing the view that the Federal Reserve has finished its campaign to raise interest rates.
Gold and inflation data
Despite the sharp decline in the dollar and bonds, gold was unable to benefit significantly and had a rather modest increase, said Ilya Spivak, head of global macro at Tastylive.
Data on Tuesday showed that US inflation slowed in October, and that the annual rise in core inflation was the smallest in two years.
Inflation data revealed a slowdown in price growth during October to 3.2% on an annual basis, compared to 3.7% in September.
The weaker-than-expected inflation reading pushed the dollar index to its lowest level in more than two months, making gold less expensive for holders of other currencies. US 10-year Treasury yields fell to their lowest levels in nearly two months.
US interest rate futures on Tuesday forecast a 65% chance of a rate cut in May next year, compared to 34% late Monday.
Investors now expect US interest rates to be stabilized during the Federal Reserve's last meeting this year in December, with the possibility of cutting them at least 4 times in 2024.
Low interest rates in the United States make it more attractive to hold gold.
Investors are now awaiting US retail sales and producer price index data on Wednesday for further signals on the Federal Reserve's interest rate outlook. Economists expect a 0.1% increase in the producer price index last month, compared with a 0.5% increase in September.
Gold at settlement yesterday
Gold prices rose at the end of trading yesterday, Tuesday, driven by the sharp decline in the value of the dollar and Treasury bond yields, amid investor optimism about the imminent end of the monetary tightening cycle.
At the end of trading, futures prices for the yellow metal for December delivery rose by 0.85%, or $16.3, to $1,966.5 per ounce.
Gold and dollar now
Gold futures are now up 0.39% to $1,974 an ounce.
Meanwhile, spot gold contracts rose by 0.38% to $1,970 per ounce.
On the other hand, the dollar index rose by 0.1% to 104 points.
other metals
Silver rose in spot transactions 0.3 percent to $23.15 per ounce, while platinum settled at $885.94. Palladium gained 0.2 percent to $1,018.60 an ounce.
