Gold inched closer to an all-time high as investors accelerated bets that the Federal Reserve will start cutting interest rates next year.
Traders are increasingly positioning for a hard economic landing and aggressive Fed easing next year, with speculators in the US Treasury market now the most bullish on record, according to a weekly survey by JPMorgan Chase & Co. since 1991.
Bond yields continued to fall as investors digested comments from Fed officials on Wednesday. Federal Reserve Bank of Cleveland President Loretta Mester signalled that she would support keeping rates on hold at the December meeting, saying policymakers are “in a good place” to assess whether inflation is on a path back to 2%.
While Atlanta Fed President Raphael Bostic said he’s increasingly confident that inflation is firmly on a downward path, his Richmond counterpart Thomas Barkin told CNBC that the central bank should keep the option of a hike on the table.
Gold has risen more than 11% since the start of October, initially fuelled by haven buying in the wake of the Israel-Hamas war. Prices are now within sight of record highs set during the pandemic, supported by a fall in global bond yields, which are on track for their best month since 2008.
Data on Wednesday showed the US economy grew faster than first estimated in the third quarter, while consumer spending rose less than expected. Later in the week, investors will look to the Fed’s preferred measure of underlying inflation for further clues on the direction of interest rates.
Spot gold was up 0.3% at $2,047.37 by 11:26 a.m. in New York. It’s now less than $30 off its all-time high.
