Weaker dollar pushes gold to one-week high

WEB DESK: Gold prices reached a one-week high on Tuesday driven by a weaker US dollar as investors awaited comments from Federal Reserve officials for insights into future of US interest rates.

Spot gold increased by 0.4 per cent to $2,623.54 per ounce, marking its highest level since November 12. This followed a 2 per cent gain on Monday. US gold futures also rose 0.5 per cent to $2,627.60.

The US dollar softened as traders took profits following its strong rally last week. A weaker dollar typically makes gold more affordable for buyers using other currencies.

“Recent market movements are primarily technical, with the US dollar being overbought,” explained Kyle Rodda, a financial market analyst at Capital.com.

Strong US economic data has raised concerns over whether the Federal Reserve will continue its recent interest rate cuts, which have totaled 75 basis points since September. Several Fed officials are expected to speak this week, potentially offering more clarity.

Rodda noted that gold prices could fluctuate based on any shift in expectations for the Federal Reserve’s December meeting. Any relevant data or statements from officials could influence the market.

Currently, traders see a 58.8 per cent chance of a 25-basis-point rate cut in December, with a 41.2 per cent chance that rates will remain unchanged.

In global news, Russia launched its largest airstrike on Ukraine in nearly three months on Sunday, severely impacting Ukraine’s power infrastructure.

Gold, a non-yielding asset, often performs well in environments with lower interest rates and geopolitical uncertainty.

Read next: Global oil prices drop as Norway restarts production