Finance
Gold prices rose more than 1% on Wednesday as the dollar and bond yields fell amid signs that the Federal Reserve’s aggressive rate hikes were dampening inflationary pressures, prompting speculation that the Fed might shift to smaller rate hikes.
While the Fed is widely expected to raise interest rates by 75 basis points in November, it is also likely to debate how much higher it can safely push borrowing costs.
“A calibration in the pace of Fed tightening may slow the pace of gold’s decline but a dovish pivot would be key for gold prices to regain its allure,” Christopher Wong, a currency strategist at OCBC, said in a note.
By 0905 GMT, spot gold had risen 1.3% to $1,674.09 per ounce, its highest level since October 13.
Gold futures in the United States increased 1.3% to $1,678.60.
Despite a rebound in equities, gold is benefiting from a weaker dollar and some expectations of a slowing in the pace of Fed rate hikes, according to UBS analyst Giovanni Staunovo.
However, he stated that the large rate hikes still expected at upcoming meetings could cause gold to fall to $1,600 by the end of the year.
On Tuesday, data showed that consumer confidence in the United States fell in October, home prices fell sharply in August, and there were signs that the Fed’s aggressive stance was starting to cool the labor market.
Taking cues from the data, 10-year Treasury note yields fell, while the dollar index fell to its lowest level since September 20, boosting gold’s appeal among those holding other currencies.
On the data front, investors will be watching the US GDP and a European Central Bank meeting on Thursday, followed by US core inflation data on Friday.
Spot silver increased 2.2% to $19.76 per ounce, platinum increased 2.2% to $934.88, and palladium increased 1.8% to $1,957.32.
Source:BS
