In the current trading moments, gold prices have risen significantly, with the US dollar continuing to weaken and Treasury yields falling. Prices are approaching $2,000 an ounce, reinforcing the market’s positive outlook.
Investors are awaiting a high-profile event, as the minutes of the Fed meeting are scheduled for today. This comes just a day before the results of the last Bank of England meeting are announced, and you also note the expectations of the minutes of the ECB meeting on Thursday.
In another context, the US dollar has fallen to its lowest level in more than two and a half months, due to investors’ expectations of a cut in US interest rates next year. The weakening of the dollar is a catalyst for the rise in gold prices, as gold becomes more attractive to holders of other currencies due to its low cost.
Moreover, 10-year US Treasury yields are clearly falling to their lowest levels in almost two months, the value they touched last week. The minutes of the Fed’s latest meeting are expected later in the day, as signs of slowing inflation in the US reinforce expectations that the US central bank has finished raising interest rates.
It is worth noting that markets widely expect the Fed to leave interest rates unchanged at the December meeting, and current estimates point to a chance of more than 50% of a rate cut of at least 25 basis points by May. These are indicative of a weakening US economy and declining inflation. According to the Federal Interest Tracker, low interest rates reduce the opportunity cost of holding gold.
US bond yields fall and gold demand rises
In terms of technical analysis, Edward Meyer, a leading metals analyst and research provider, points out that several factors are driving the rise in gold prices. Among these factors are the continued decline in US dollar and bond yields, as well as strong demand from central banks for gold. This analysis is a positive indicator of market sentiment and reinforces optimism that gold prices will rise in the near future.
It is important to note that the rate cut is likely not to be discussed in the minutes of the US Federal Reserve meeting, as Jerome Powell, Chairman of the Federal Reserve, clearly confirmed this at the last press conference. However, expectations by the market remain trending towards expectations of interest rate cuts by the US Federal Reserve.
Overall, investors expect gold prices to continue to rise amid a weaker dollar and expectations of a U.S. interest rate cut. With strong demand from central banks for gold still strong, it looks like gold will remain one of the attractive assets for investors in the coming period.
Gold prices fell when settling trading, on Monday, as markets awaited the release of minutes of central bank meetings in major economies this week, to build expectations on interest rates.
At settlement, gold futures for December delivery fell 0.2%, or $4.4, to $1,980.3 an ounce, paring losses after touching $1,967.20.
Gold futures are now up 0.7% at $1,994 an ounce. Spot gold contracts rose 0.74% to $1,992 an ounce.
On the other hand, the US dollar index fell 0.15% to 103.160 points.
As for other metals, spot silver rose 1.6 percent to $23.74 an ounce, platinum gained 0.4 percent to $922.10, while palladium fell 0.3 percent to $1,074.44.
