Gold futures soared on Tuesday (Nov. 14), propelled by a weakening dollar and a lower-than-anticipated US inflation report. This development has raised investor optimism, anticipating a possible cessation in the Federal Reserve’s ongoing interest rate hike campaign.
Gold futures surged by $16.30, marking a notable 0.84% increase, to settle at $1,966.50 per ounce. Complementing this bullish trend, silver futures rallied by 77.40 cents, a substantial 3.46% surge, closing at $23.132 per ounce. Platinum futures also demonstrated a strong uptick, climbing $29.20, or 3.38%, to conclude at $892.80 per ounce. Palladium futures similarly experienced an upswing, rising by $44.30, a robust 4.51% surge, reaching $1,026.60 per ounce.
The dollar index, gauging the greenback against a basket of six major currencies, witnessed a significant 1.49% decline to 104.053, providing substantial support to the precious metals market. The depreciation of the dollar has rendered gold contracts, priced in dollars, particularly appealing to investors holding alternative currencies.
The positive momentum in gold contracts was further bolstered following the release of the US Department of Labor’s Consumer Price Index (CPI) data. The report revealed a 3.2% year-on-year increase in October, below analysts’ predictions of 3.3%, down from September’s 3.7%. Additionally, the core CPI, excluding food and energy, reported a 4.0% year-on-year rise in October, also falling short of expectations at 4.1%, compared to September’s 4.1%.
This economic data has significantly amplified investor confidence, with market sentiment now expecting the Federal Reserve to maintain interest rates within the range of 5.25-5.50% during its meetings in December 2023 and January 2024. Moreover, there is a growing sentiment among investors, with a 65% probability, that the Fed might initiate a 0.25% interest rate cut, setting rates between 5.00-5.25%, during its May 2024 meeting. This figure surged from 34% in the previous survey, indicating a faster-than-expected adjustment compared to initial projections that anticipated a rate cut in June 2567.
The gold market’s buoyancy amid the weakening dollar and tempered inflation figures signals shifting investor expectations regarding the Fed’s monetary policy decisions in the coming months.
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Wednesday, November 15, 2023