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Gold near 7-month high as dollar, yields drop


Spot gold gained 0.2 per cent to $2,044.53 per ounce after reaching its highest since May 5 and US gold futures for December delivery added 0.3 per cent to $2,045.40 per ounce

Gold prices hit a nearly seven-month high on Wednesday propelled by an extended decline in the US dollar and bond yields as investors grew confident that the Federal Reserve would likely cut rates by the first half of next year.

Spot gold gained 0.2 per cent to $2,044.53 per ounce by 0453 GMT after reaching its highest since May 5. US gold futures for December delivery added 0.3 per cent to $2,045.40 per ounce.

Gold is driven by a growing market expectation of a Fed pivot from a hawkish tilt to a dovish tilt in the first half of next year – earlier than it did before, said Kelvin Wong, senior market analyst for Asia Pacific at Oanda.

The key point data to look for is the PCE data and markets are expecting another slowdown in inflationary pressure in US, Wong added.

Fed Governor Christopher Waller on Tuesday flagged a possible rate cut in the months ahead, feeding market expectations that US rates have peaked.

Traders are now pricing in a more than 70 per cent chance of rates dropping in May 2024, compared with a 50 per cent probability on Tuesday, according to CME’s FedWatch Tool.

Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion.

Investors’ attention is now on the revised US third-quarter GDP figures, due at 1330 GMT and on key PCE data – Fed’s preferred inflation gauge – on Thursday.

Making gold less expensive for other currency holders, the dollar index hit a more than three-month low against its peers, and was poised to mark its worst monthly performance in a year. In the meantime, yields on 10-year Treasury notes dropped to more than two-month lows of 4.2860 per cent.

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