Gold prices rose, during trading on Thursday, supported by the decline in the US currency, and the decline in US bond yields.
Prices rose more than $35 at the end of Wednesday, hitting a one-month high, with the release of US inflation data.
The rise in gold prices coincides with investors awaiting the release of the minutes of the latest policy meeting of the Federal Reserve, to obtain clues on when the US bank will start withdrawing its stimulus.
Gold And Metal Prices Today
The price of gold futures contracts for December delivery increased by 0.12%, to record $1,796.80 an ounce, by 09:45 AM GMT (12:45 PM Mecca Time).
And the price of spot delivery of the yellow metal rose by 0.21%, to record $1,796.72 an ounce.
Among other precious metals, the price of silver futures – for December delivery – rose by 0.65%, to reach the level of $23.32 an ounce.
The spot platinum price also increased by 1.47%, recording $1038.19 an ounce.
Meanwhile, the dollar index – which follows the performance of the US currency against a basket of 6 major currencies – declined by 0.26% to 93.8350 points.
Chief Market Analyst for Asia Pacific at Oanda, Jeffrey Halley, expects the US dollar and futures prices to resume rising quickly rather than in the long term, noting that this rally will fade quickly.
Han Tan, chief market analyst at Xinity, expressed his concerns about stagflation and the Fed’s decisions as the main driver of gold prices.
He added that gold’s gains are vulnerable to the rebound in US Treasury bond yields, after the Federal Reserve began gradual tapering operations.
The Federal Reserve’s September meeting showed the central bank’s intention to start cutting stimulus in mid-November.
Policy makers have expressed concern that inflation will continue to rise for longer than expected.
Update – gold prices rise $ 35, recording the highest level in a month
Low central bank stimulus and interest rate hikes tend to push up US bond yields; This promotes a higher opportunity cost of holding gold.
Yields on the benchmark 10-year US Treasury have fallen from their highest level in more than 4 months; This lowers the opportunity cost of holding gold without interest.
Prices for the American consumer rose in September, amid expectations of a greater rise in light of the increase in energy prices; What puts pressure on the Federal Reserve, according to Reuters.
The holding of the largest gold-backed exchange-traded fund (SPDR) Gold Trust fell 0.2% to 982.72 on Wednesday, down from 985.05 tons last Tuesday.
The additional drop in the long-term US Treasury yields increased additional support towards gold prices.
This has offset the risk in the markets, undermining the demand for traditional gold as a safe haven, and the markets are looking to meet the futures and spot contracts for gold supply at higher levels, according to FX Street.
Expectations are for an early policy tightening by the Federal Reserve, but a continuation of gold at $1800 is seen as a fresh catalyst, paving the way for additional gains.
The monetary policy meeting of the Federal Open Market Committee, which was held on September 21-22, confirmed that the US central bank is on the right track to start reducing its purchases of bonds this year.
The greenback saw a typical reaction, with its weekly gains reaching a 13-month high, as further declines in long-term US Treasury yields were seen as another factor weighing heavily on the dollar.
Investors are looking forward to the US economic calendar, which includes the release of the Producer Price Index and initial weekly jobless claims later, during the early North American session.
Investors are awaiting the announcement of US bond yields, and speeches by members of the Federal Open Market Committee, which are expected to influence the dynamics of US dollar prices.