“The weaker-than-expected CPI number has changed the narrative when it comes to yields, along with the notable turnaround we’ve seen in recent Fed spokespeople,” said Michael Hewson of CMC Markets UK. Traders now see a 71.5% chance of a 50 basis point rate hike at the December Fed meeting.
Higher rates increase the opportunity cost of holding bullion, which does not earn interest, so expectations of a lower rate increase boost confidence.
“Coupled with a technical break above the October highs, the likelihood of gold hitting the u$s1.800 it has become much more likely,” Hewson said, adding that trading is likely to remain choppy and the dollar to weaken further from here.
The dollar index extended its decline, falling to its lowest level in almost three months, making gold more attractive to foreign buyers. The return on 10-year US Treasury bonds fell to its lowest level in a month on Thursday. Gold prices and yields move in opposite directions.
In other precious metals, spot silver fell 0.8% to $21.50 an ounce but posted its second straight weekly gain. Meanwhile, platinum rose 0.3% to $1,035.50 to register its biggest weekly advance since February 2021; and palladium improved 2.7% to $2,018.13.
Source: Ambito
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