Gold prices reached their highest level in six weeks on Monday, as a weaker dollar and an initial risk-off sentiment established the tone, and investors awaited a possible U.S. rate cut later this month, with silver reaching a historic high.
Spot gold increased 0.2 percent to $4,240.54 per ounce as of 0401 GMT, following its highest level since October 21. U.S. gold futures for December delivery profit 0.5 percent to $4,276.00.
However, Silver gained 2 percent to $57.48 per ounce following a previous all-time high of $57.86. The U.S dollar dropped to its lowest point in two weeks, such that the greenback-priced bullion became cheaper to the holders of other currencies.
OANDA senior market analyst Kelvin Wong said that “There’s a risk-off session in S&P futures, which are down 0.8% in line with a sell-off in major cryptocurrencies. So that has also created a bit of positive feedback loop into gold as a safe haven asset play in today’s much more thinly traded session.”
U.S. stock futures decreased in Asian trade, while among cryptocurrencies, bitcoin dropped 3.6 percent to $87,881.82 and ether fell 5 percent to $2,871.59.
The latest dovish statements of Federal Reserve Governor Christopher Waller and New York Fed President John Williams, and more relaxed U.S. data, have strengthened the expectation that the Federal Reserve will reduce policy in December.
CME’s FedWatch tool reported that the futures show an 87 percent chance of a rate cut. White House economic adviser Kevin Hassett, who has witnessed as a frontrunner for Fed Chair, stated on Sunday that he would be pleased to accept the job if appointed by President Donald Trump.
Similarly, Trump and Hassett believe rates must be lower. The markets are still waiting until Friday to get the core U.S. Personal Consumption Expenditures data to give additional indicators on how the Fed will proceed with their policies.
Therefore, the reduced cost of borrowing is likely to favor non-yielding bullion. Wong said that the silver prices have been volatile with tight liquidity due to the CME disruption last week, not any underlying factor.
Other key metals included platinum, which increased 1.3 percent to reach $1,694.70, and palladium, which increased 2.1 percent to reach $1,482.45.
