November 21, 2023 / 05:15 PM IST
The dollar fell to more than a 2-1/2-month low, making gold less expensive for other currency holders.
Gold prices rose to an over two-week high on Tuesday, as the U.S. dollar dipped on expectations that the Federal Reserve is done with hiking interest rates, while investors awaited minutes from the central bank’s latest meeting for further policy cues.
Spot gold climbed 0.6% to $1,988.39 per ounce, as of 1025 GMT, after hitting its highest level since Nov. 3 earlier in the session.
U.S. gold futures gained 0.5% to $1,990.20.
Expectations of a dovish Fed in 2024 have triggered a decline in the U.S. dollar, helping gold recover from recent lows, said Carlo Alberto De Casa, market analyst at Kinesis Money.
“I don’t think the case for a rebound in gold is related to physical demand. What we’re seeing now is only related to interest rates, yields and expectations for Federal Reserve in 2024,” De Casa added.
The dollar fell to more than a 2-1/2-month low, making gold less expensive for other currency holders. Meanwhile, the benchmark U.S. 10-year Treasury yields hovered near two-month lows touched last week. [USD/] [US/]
Investor focus is now on the minutes from the Fed’s latest meeting, due at 1900 GMT. Signs of slowing inflation in the United States have boosted expectations that the central bank was done raising interest rates.
Markets are widely expecting the Fed to leave rates unchanged in the December meeting and are currently pricing in a 60% chance of a rate cut of at least 25 basis points by May, according to CME’s FedWatch Tool.
Lower interest rates decrease the opportunity cost of holding gold.
Among other precious metals, spot silver rose 0.7% to $23.57 per ounce, platinum gained 0.5% to $923.09, while palladium fell 0.7% to $1,085.29.