Gold hits one-week high on softer US dollar; markets await Fed cues

Gold prices climbed to a one-week high on Tuesday (Nov 19), buoyed by a softer US dollar, while the market awaited comments from Federal Reserve officials for cues on the US interest rate outlook.

Spot gold rose 0.4 per cent to US$2,621.95 per ounce by 0514 GMT, the highest since Nov 12. Prices were up 2 per cent on Monday.

US gold futures gained 0.5 per cent to US$2,626.30.

The US dollar pulled back as profit-booking kicked in after last week’s stellar rally. A weaker dollar makes bullion less expensive for buyers holding other currencies.

“Recent market movements are largely technical, influenced by an overbought US dollar,” said Kyle Rodda, financial market analyst at Capital.com.

The recent strong economic data has raised concerns on whether the Fed will continue to cut rates after 75 basis points (bps) of reductions since September.

Several Fed officials are scheduled to speak this week, potentially offering insights into the rate cut trajectory.

Gold price movements will be a reflection of any change in expectations about the December meeting, Rodda said, adding that any data or comments from officials pertaining to it will be relevant.

Traders currently see a 58.9 per cent chance of a 25 bps cut in December versus 41.1 per cent odds of holding the rates steady.

On the geopolitical front, Russia unleashed its largest air strike on Ukraine in almost three months on Sunday, severely damaging the country’s power system.

Non-yielding assets such as bullion thrive in lower interest rates environment and amid geopolitical uncertainties.

A tight US labour market is still adding to inflationary pressures, although less than it did in 2022 and 2023, according to San Francisco Fed economists.

Among other metals, spot silver added 0.3 per cent to US$31.26, hitting one-week high earlier in the session. Platinum ticked 0.2 per cent higher to US$969.70.

Palladium was steady at US$1,005.75 after rising more than 5 per cent on Monday. REUTERS