Gold prices rose, supported by a decline in the dollar and a decline in US Treasury bond yields, as traders awaited economic data from Washington in search of more evidence regarding the expectations of monetary policy decisions of the Federal Reserve (the US central bank).
The spot price of gold rose 0.22% to $2,035.8 per ounce at the time of preparing this report, and futures contracts for February delivery settled at $2,047.20.
Bond yields
US 10-year bond yields stabilized near the lowest level in 5 months, which they touched yesterday, Wednesday, after inflation in Britain fell last November to its lowest level in more than two years.
The dollar index fell 0.07% against 6 major currencies to 102.34 points, making gold less expensive for holders of other currencies.
Reuters quoted Kyle Rodda, a financial markets analyst at Capital.com, as saying that gold remains supported by the possibility of a global interest rate cut, especially in the United States.
He added, “From a technical point of view, prices have lost momentum, and there is a risk that we will witness a decline in the short term, especially in light of the recent response from Federal Reserve officials regarding the possibility of cuts next year and the potential overbought nature of bonds.”
The Federal Reserve’s dovish bias at its latest policy meeting prompted traders to plan for several rate cuts in 2024 starting in early March.
However, Fed officials have since been opposed to the idea of rapid rate cuts next year, and a rate cut reduces the opportunity cost of holding non-yielding gold bullion.
Keep an eye on the data
Focus now turns to the US third-quarter GDP report and weekly jobless claims data later today, ahead of the much-awaited November core PCE report, the Fed’s preferred measure of core inflation, on Friday.
Yesterday, Wednesday, data showed that existing home sales in the United States rose unexpectedly in November, while consumer confidence increased more than expected in December, amid optimism about the labor market.
