Gold prices rose to a two-week high on Thursday, supported by a weak dollar after US Federal Reserve Chairman Jerome Powell’s speech raised hopes of a modest interest rate hike.
Spot gold rose 0.8% to $1,781.79 an ounce, its lowest since Nov. 16, at 0546 GMT. US gold futures climbed 1.9% to $1,793.80.
Powell said Wednesday at the Brookings Institution in Washington, the Fed could scale back the pace of its rate hikes “by December.”
The dollar index declined 0.5%, making gold more attractive to overseas buyers. Citi Index analyst Matt Simpson said Powell effectively confirmed the Fed would slow the pace of tightening, sending the dollar lower and gold higher.
Market participants now expect a 91% chance of a 50 basis point hike in the central bank’s upcoming December meeting.
Lower rates boost bullion’s appeal as it lowers the opportunity cost of holding the non-yielding asset, which was up more than 8% in November – its biggest monthly gain since July 2020.
Investors’ attention now turns to non-farm payrolls data due on Friday from the US Labor Department, and that is likely to influence the Fed’s policy decisions.
“A strong jobs report would give the Fed the green light to continue hiking while inflation remains high, which is bad for gold.
A weaker report could be beneficial for gold as it points to further lower consumer demand, which is deflationary,” Simpson said. Traders also took stock of news that top bullion consumer China may ease some COVID-related restrictions. reducing.
Gold rises 1% on rate hike fears due to weak dollar
“If China eases its COVID measures and the economy begins to recover, demand for physical gold will increase and so will demand for industrial metals,” said Brian Lan, managing director at Singapore-based dealer Goldsilver Central.
Silver rose 0.8% to $22.37, platinum rose 0.8% to $1,041.38 and palladium gained 1.5% to $1,910.00.