Gold prices reached a six-month high on Monday, surpassing $2,000 per ounce, propelled by a weakened US dollar and growing speculation that the Federal Reserve may conclude its interest rate hike cycle.
At 10:19 am GMT, spot gold exhibited a 0.6% increase, reaching $2,012.92 per ounce, marking its highest level since May 16. US gold futures followed suit, rising by 0.5% to $2,013.80. Last week’s breakthrough of the $2,000 per ounce threshold signalled a significant milestone for bullion prices.
On Monday, a 0.1% decline in the US dollar against a basket of currencies brought it closer to the two-month low it touched the previous week. A weakened dollar typically makes gold more affordable for holders of other currencies, contributing to the surge in gold prices.
The upward trajectory of bullion prices has been fueled by speculation that the US Federal Reserve may refrain from further interest rate hikes. Preliminary figures hinting at a slowdown in inflation have intensified this speculation. Lower interest rates diminish the opportunity cost of holding non-interest-bearing assets, often resulting in increased demand for gold.
The rally in gold prices dates back to the onset of the conflict between Israel and the Palestinian armed group Hamas in early October. The ongoing uncertainty in the Middle East has continued to bolster gold’s status as a haven during economic instability.
As experts and traders expect the uncertainty in the Middle East to persist, all eyes are now on upcoming official US inflation data scheduled for later this week. The data could further influence market sentiment and contribute to the evolving narrative surrounding gold prices.
The surge in gold prices to a six-month high reflects a confluence of factors, including dollar weakness, speculation on the Federal Reserve’s interest rate policies, and geopolitical tensions in the Middle East. As gold continues to assert its role as a haven amid economic uncertainties, investors and analysts closely monitor developments that could further shape the precious metal’s trajectory in the coming weeks.
