Demand For Gold Rises As The US Dollar Weakens And Yields Rise

(CTN News) – Gold prices experienced an increase on Thursday, remaining close to the significant $2,000 per ounce mark. This rise can be attributed to a weaker US dollar and lower Treasury yields, which have bolstered the demand for gold.

As of 0354 GMT, spot gold saw a 0.4% increase, reaching $1,997.39 per ounce. It had previously reached a three-week high of $2,007.29 on Tuesday.

Meanwhile, US gold futures also saw a gain of 0.3%, reaching $1,998.60.

Kelvin Wong, senior market analyst for Asia Pacific at OANDA, explained that the expectation of an upcoming peak in the interest rate hike cycle has resulted in a decline in the US dollar and longer-dated US yield. This, in turn, will continue to support gold prices, at least in the short term.

Gold became more affordable for holders of other currencies as the dollar weakened by 0.1% against its competitors, following two consecutive sessions of gains.

On Wednesday, the US 10-year Treasury yields dropped to a two-month low. Despite indications of a slowdown in price increases, a survey released on the same day revealed that US consumers’ inflation expectations rose for the second consecutive month in November.

Although the number of Americans filing new claims for unemployment benefits decreased more than anticipated last week, it is still likely that the labor market is slowing due to higher interest rates.

According to CME’s FedWatch Tool, traders are anticipating that the US Federal Reserve will maintain the current rates in December.

However, their expectations of rate cuts in 2024 have been reduced after the jobless claims data. The minutes of the Oct. 31-Nov. 1 gathering revealed that Fed officials agreed to proceed with caution and only increase interest rates if inflation control progress is hindered.

Holding gold becomes less costly with lower interest rates. Spot silver, platinum, and palladium prices have increased by 0.5%, 0.5%, and 0.2% respectively.

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