Gold prices rose for a fourth straight session on Tuesday, hitting a more than six-month high, boosted by a retreating dollar and expectations that the Federal Reserve has finished raising interest rates.
Spot gold was up 1.2% at $2,039.79 an ounce by midday EDT, its highest since May 11. US gold futures for December delivery were up 1.3% at $2,039.90 an ounce.
Gold remains bullish in the near term, with the dollar index in a downtrend on hopes that the Fed will stop raising rates and perhaps even cut them by spring, Jim Wyckoff, senior analyst at Kitco Metals, said in a Reuters note.
However, “if (US) GDP numbers and inflation indicators come in stronger than expected, it will dampen traders’ enthusiasm for bullion,” Wyckoff added.
Traders widely expect the Federal Reserve to leave interest rates unchanged in December and are pricing in about a 50% chance of a cut in May next year, the CME’s FedWatch tool shows.
Fed governor Christopher Waller said he was “increasingly confident” that policy was in the right place.
This made bullion cheaper for overseas buyers, with the Dollar Index hitting its lowest level since mid-August on Tuesday.
Investors will be watching Thursday’s US Personal Consumption Expenditures data, the Fed’s preferred inflation gauge. Also in focus will be Wednesday’s revised US third-quarter GDP figures.
A sense of caution ahead of another busy week for global financial markets is also supporting the precious metal. With the $2,000 level proving to be an extremely tough resistance to break, gold could end up falling without a strong fundamental catalyst,” said Lukman Otunuga, senior research analyst at FXTM.
