Precise Investors

Alternative Investments

Gold rises on prospects of Fed rate cuts next year


Spot gold was 0.2 per cent higher at $2,056.80 per ounce, while US gold futures were stable at $2,068.60 per ounce

Gold prices rose in holiday-thinned trade on Tuesday, helped by a softer US dollar and lower bond yields on rising prospects of interest rate cuts by the Federal Reserve as early as March next year.

Spot gold was 0.2 per cent higher at $2,056.80 per ounce, as at 0118 GMT.

US gold futures were stable at $2,068.60 per ounce.

The US dollar index dropped 0.1 per cent, making gold more attractive for other currency holders, while benchmark US 10-year bond yields edged lower to 3.9 per cent.

Data on Friday showed that US prices dropped in November for the first time in over 3½ years, pushing the annual increase in inflation further below 3 per cent, and bolstering financial market expectations for an interest rate cut from the Fed next March.

A revised reading on third-quarter GDP showed the US economy grew slightly less than initially expected. The figure still showed the US economy growing far more than its peers in the developed world, but a smaller-than-expected increase in weekly jobless claims ramped up hopes for a cooling labour market.

Traders are now pricing in an 88 per cent possibility for a rate cut by the Fed in March, shows the CME FedWatch tool.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

In the meantime, data out on Tuesday showed that Japan’s jobless rate was unchanged at 2.5 per cent in November from the previous month, while business-to-business service inflation was stable at 2.3 per cent last month.

Spot silver increased 0.3 per cent to $24.23 per ounce, while platinum was steady at $970.63. Palladium jumped 0.8 per cent to $1,212.34.

Markets in Australia, New Zealand, Hong Kong and the eurozone are closed Tuesday for the Boxing Day public holiday.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Precise Investors. The information provided on Precise Investors is intended for informational purposes only. Precise Investors is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

Leave a Reply