Gold Extends Gains With US Dollar and Fed Rate Path in Focus
Gold rose for a second day, with the market focused on the dollar and the Federal Reserve’s interest-rate path.
Bullion traded near $2,630 an ounce following a 1.9% surge in the previous session, which was the biggest gain since August. That advance came as the greenback paused its recent rally.
The recent gains follow a string of losses driven by a strengthening dollar following Donald Trump’s US-election win, as well as signs the Federal Reserve may have to slow the pace of interest rate cuts.
“Gold started the week on a positive note, recovering from a significant decline last week, driven by a cooling US dollar and reduced profit-taking activity,” Pepperstone Research Strategist Quasar Elizundia said in a note. “The near-term outlook for gold remains slightly tilted to the downside as political and macroeconomic conditions continue to favor the dollar.”
Analysts at Goldman Sachs Group Inc. have said the recent dip presents a buying opportunity. In a research note on Sunday, the bank reiterated its forecast that gold will hit $3,000 an ounce by the end of next year, fueled by central bank buying and trade tensions.
Investors will also be parsing comments by Fed policymakers ahead of next month’s rate decision meeting, with several officials due to speak this week.
Some have already signaled an openness to more easing, after Fed Bank of Chicago Austan Goolsbee on Nov. 15 borrowing costs would be “a lot” lower over 12-18 months, as long as inflation continues to drop toward the bank’s 2% goal. Lower rates typically support bullion.
Spot gold rose 0.9% to $2,634.95 an ounce by 11:10 a.m. in London. The Bloomberg Dollar Spot Index was little changed. Silver and platinum rose while palladium was steady.
Source : Bloomberg
