Gold price rebounds to 2-week high on Fed relief hopes
Gold prices rose to a two-week high on Wednesday as the US dollar and Treasury yields slipped on expectations that the Federal Reserve would temper its aggressive rate-hike stance from December.
Spot gold rose 1% to $1,668.92 per ounce by 10:50 a.m. ET after touching its highest since October 13. US gold futures were up 0.8% to $1,669.90 per ounce in New York.
Meanwhile, the dollar extended losses to a more than one-month low against its rivals, making gold less expensive for other currency holders. Benchmark US 10-year Treasury yields also dropped to a one-week low.
“Over the course of the last couple sessions, we’ve seen yields drop, the dollar come down and as a result, we’ve seen a renewed bid in the gold market,” David Meger, director of metals trading at High Ridge Futures, said in a Reuters report.
Data on Tuesday showed that US consumer confidence ebbed in October, home prices fell sharply in August and there were signs that the Fed’s aggressive stance was starting to cool the labour market.
“We might see a slowing of the economy, but inflation may not come down as much as the Fed would like and yet they will be no longer able or willing to raise rates further and that is a very positive environment for gold,” Meger added.
Focus now shifts to the US GDP data on Thursday, followed by core inflation numbers on Friday that could offer more clarity on the Fed rate hike trajectory.
