By Arundhati Sarkar
(Reuters) – Gold prices extended their new year rally to jump more than 1% and hit their highest since mid-June on Wednesday, helped by a weaker dollar and growing expectations of less aggressive rate hikes going forward.
Spot gold was up 1.2% to $1,860.64 per ounce at 0941 GMT, hitting its highest since June 13. U.S. gold futures gained 1.1% to $1,867.00.
There is some optimism in the market ahead of the release of minutes from the Fed’s December meeting later in the day, Kinesis Money external analyst Carlo Alberto De Casa said.
“Majority of investors are betting on a 0.25% rate hike in the next Fed meeting, differently from a few weeks ago, when another 0.50% rate was given as almost sure.”
Minutes from the Fed’s December meeting, when it raised rates by 50 basis points (bps), after four consecutive 75 bps hikes, are due to be released at 1900 GMT.
Market participants will also scan U.S. job openings data at 1500 GMT.
The dollar index, meanwhile, slipped 0.6%, making gold less expensive for overseas investors. [USD/]
“The minutes will likely give an idea about the Fed’s policy decisions and this will impact dollar and gold,” said Hareesh V., head of commodity research at Geojit Financial Services.
“Ongoing recession concerns and geopolitical tensions are likely to lift gold’s safe-haven appeal in 2023. There are chances of more inflows to gold when the Fed starts easing policies.”
Bullion, traditionally seen as a hedge against inflation, tends to suffer in a rising rates environment.
“The current price increase of gold and silver does not seems to be temporary, but it appears more as a structural movement,” De Casa added.
Elsewhere, spot silver rose 1.4% to $24.3255 per ounce, platinum added 0.6% to $1,090.58, and palladium advanced 0.8% to $1,723.38.
(Reporting by Arundhati Sarkar and Ashitha Shivaprasad in Bengaluru)
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