Gold prices have reached a six-month high, rising above $2,000 per ounce, due to a weaker dollar and expectations that the US Federal Reserve will pause interest rate hikes. Spot gold rose to $2,013.99 per ounce, the highest since May 16, and US gold futures also increased to $2,015.00. The dollar weakened by 0.2 percent against major currencies, making gold less expensive for holders of other currencies.
According to Craig Erlam, a senior markets analyst at OANDA, the surge in gold prices is “purely technical” and driven by last week’s US inflation data and jobs report. Additionally, investors are closely watching for revised US third-quarter GDP figures on Wednesday and the PCE price index, the Fed’s preferred inflation gauge, on Thursday.
Expectations for an earlier-than-expected easing of monetary conditions by the Federal Reserve have increased following data indicating a slowdown in US inflation. Traders widely expect the Fed to hold rates in December, with about a 60 percent chance of a cut in May next year, according to CME’s FedWatch Tool.
Lower interest rates reduce the opportunity cost of holding non-interest-bearing assets, which often boosts gold prices. Silver jumped 1.7 percent to $24.71 per ounce, while platinum fell 0.3 percent to $927.64 and palladium increased by 0.8 percent to $1,077.56 per ounce.
