By Brijesh Patel
(Reuters) – Gold prices rose to their highest levels in more than two weeks on Tuesday, aided by a weaker U.S. dollar and lower Treasury yields as investors look forward to minutes from the Federal Reserve’s latest meeting for cues on its interest rate outlook.
Spot gold was up 0.7% at $1,991.37 per ounce, as of 0713 GMT. U.S. gold futures gained 0.7% to $1,993.50.
“The dollar and the U.S. bond yields continue to come down. Demand from central banks is also quite strong. All these are bullish for gold. The market is reconsidering that drop we saw yesterday,” said Edward Meir, a metals analyst who provides research for Marex.
The dollar fell to more than a 2-1/2-month low as investors expect U.S. interest rates to fall next year. A weaker dollar makes gold less expensive for other currency holders. [USD/]
Benchmark U.S. 10-year Treasury yields hovered near two-month lows touched last week. [USD/]
Minutes from the Fed’s latest meeting are due at 1900 GMT. Signs of slowing inflation in the United States have boosted expectations that the U.S. central bank was done raising interest rates.
Markets are widely expecting the Fed to leave rates unchanged in the December meeting and currently pricing in a greater than 50% chance of a rate cut of at least 25 basis points by May, according to CME’s FedWatch Tool.
Lower interest rates decrease the opportunity cost of holding gold.
“We believe the main factors buoying gold in 2024 will be interest rate cuts by the U.S. Fed, a weaker U.S. dollar, and high levels of geopolitical tension,” Fitch Solutions analysis unit BMI said in a note.
Spot gold may revisit its Oct. 27 high of $2,009.29 per ounce, as it has pierced above a resistance at $1,991, according to Reuters technical analyst Wang Tao. [TECH/C]
Spot silver rose 1.3% to $23.70 per ounce, platinum gained 0.4% to $922.16, while palladium eased 0.2% to $1,075.88.
(Reporting by Brijesh Patel in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)
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