Gold prices rose on Wednesday as the dollar fell after many Federal Reserve officials in the United States said that the recent spike in Treasury yields may make additional rate hikes unnecessary. After reaching its highest level since September 29th, spot gold was 0.60% higher at $1,871.30 per ounce. Gold futures in the United States The dollar …
Gold prices rose on Wednesday as the dollar fell after many Federal Reserve officials in the United States said that the recent spike in Treasury yields may make additional rate hikes unnecessary.
After reaching its highest level since September 29th, spot gold was 0.60% higher at $1,871.30 per ounce. Gold futures in the United States
The dollar fell to a nearly two-week low against a basket of currencies, mirroring a drop in US Treasury rates, which have retreated from their 2007 highs reached last week.
“The clear debate among Fed officials is how long this terminal level of Fed funds rate will be maintained before the first interest rate cut comes into play,” Kelvin Wong, senior market analyst for Asia Pacific at OANDA, said.
On Tuesday, Minneapolis Fed President Neel Kashkari said it is “possible” that the recent jump in longer-term Treasury yields means the US central bank does not need to raise interest rates as much as it would otherwise, while Atlanta Fed President Raphael Bostic anticipates no more rate hikes.
Higher interest rates increase the opportunity cost of owning gold, which is priced in dollars and pays no interest.
Gold prices recovered from recent seven-month lows as Mideast tensions fueled safe-haven demand for metal, but its next move will be determined by this week’s U.S. inflation data, which will be critical in deciding the Fed’s impending rate trajectory.
“The attention now has been shifted to the upcoming key U.S. CPI data that is due tomorrow even though the geopolitical risk premium factor is still lingering around in the background,” he said.
The Fed’s September meeting minutes, which are due later in the day, will also be scrutinized for rate indications.
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