The expected US inflation data pressured the dollar, amid expectations that it would bring signs of a possible interest rate cut, which raised gold prices during Wednesday’s trading.
Gold prices rose today with the decline of the dollar, amid anticipation of key inflation data in the United States, seeking indications of the possible extent of the Federal Reserve (US central bank) reducing interest rates next month.
Gold rose in instant transactions by 0.55% to $2,647.68 per ounce, and gold recorded its lowest level in more than a week yesterday, Tuesday.
US gold futures rose 1% to $2,648.
The dollar index, which measures the performance of the US currency against 6 major currencies, fell by 0.51%, which enhanced the attractiveness of gold for holders of other currencies, and the dollar fell to its lowest level in almost a week yesterday, Tuesday.
For his part, Kyle Rodda, a financial markets analyst at Capital.com, said, “Gold witnessed fluctuations that accompanied the dollar’s fluctuations. However, price movement was limited in Asian trading.”
He added: “In the long term, I think that the trade war that (US President-elect Donald) Trump will launch may be positive for gold due to high debt burdens and some abandonment of the dollar.”
Traders will closely monitor core PCE data, jobless claims and the first revision to GDP, scheduled for release later today.
According to the CME Group’s FedWatch tool, markets currently expect 63% of US interest rates to be cut by 25 basis points in December.
In China, data showed that the country’s net imports of gold through Hong Kong last October decreased compared to September and declined by 43% on an annual basis.
On the geopolitical level, the ceasefire between Israel and Lebanese Hezbollah, which was reached with the mediation of the United States and France, entered into force last night.
As for other precious metals:
- Silver rose in spot transactions by 0.36% to $30.55 per ounce.
- Platinum rose 0.55% to $934.86.
- Palladium rose 1.15% to $992.45.
Dollar
The dollar stabilized against other major currencies on Wednesday, as investors continued to evaluate the impact of US President-elect Donald Trump’s pledges to impose tariffs, while awaiting important data on inflation in the United States later in the day.
The New Zealand dollar rose after the Reserve Bank of New Zealand cut benchmark interest rates by 50 basis points to 4.25%, while indicating a decline in inflation to near the middle of the target range.
Last Monday, Trump pledged to impose heavy tariffs on Canada, Mexico, and China, the three largest trading partners of the United States, which raised investor tension.
“Markets are likely to remain tense as Trump’s second term brings back uncertainty about policymaking in the United States,” said Carol Kong, a currency expert at the Commonwealth Bank of Australia.
She added: “This uncertainty may push markets to sell first and ask questions later, which is positive for the US dollar.”
Against its Canadian counterpart, the dollar rose 0.04% to 1.4058 Canadian dollars, after touching the highest level in 4 and a half years at 1.4178 Canadian dollars yesterday, Tuesday.
The dollar remained far from yesterday’s peak against the Mexican peso, after touching its highest levels since July 2022 in the previous session.
Wei Liang Zhang, a currency and credit strategist at DBS in Singapore, said: “Investors should not overreact, as tariffs are part of trade negotiation tactics, according to those close to Trump.”
The dollar stabilized before the release of personal consumption expenditures index data for October later today, Wednesday, before US markets close for the Thanksgiving holiday tomorrow, Thursday.
Most prominent currencies
- The dollar index, which measures the performance of the US currency against 6 major currencies, fell by 0.47% to 106.51 points.
- The yen outperformed its counterparts, supported by demand for safe havens and growing bets on a rise in interest rates in Japan in December.
- The dollar fell in recent trading by 0.94% to 151.66 yen.
- The euro rose 0.3% to $1.0517, while the British pound settled at $1.2596.
Bitcoin
In terms of cryptocurrencies, Bitcoin rose 0.51% to $93,408, which is much lower than the record high of $99,830 that it recorded at the beginning of the week. Bitcoin witnessed profit-taking operations before reaching the $100,000 barrier.
