Gold prices rose to a more than six-month high on Monday as the US dollar weakened and investors boosted bets that the Federal Reserve is done raising interest rates.
Spot gold was up 0.52% at $2,012.39 an ounce at 1:47 p.m. London time, but earlier in the day had hit a May 16 high of $2,017.82, Reuters reports. December gold futures hit $2,018.9, the highest since 27 October, according to CNBC calculations.
The dollar indexa measure of the greenback against a basket of major currencies, was down 0.13% as markets priced in a more than 90% chance the Fed will keep rates on hold at its next two meetings.
A weaker dollar and lower interest rates are often cited by market watchers as boosting gold prices.Goldman Sachs analysts said in a note on Sunday about the metals outlook for 2024 that gold’s “lustre is returning”.
“The potential upside for gold prices will be closely tied to US real interest rates and dollar movements, but we also expect continued strong consumer demand from China and India, as well as central bank buying, to offset the downside pressure from upside growth surprises and rate cut repricing,” they said.
Meanwhile, analysts at Bank of America said in a note on Sunday that the commodities team’s base case is for gold to appreciate from Q2 2024 as “real rates are pushed lower by Fed cuts”.
