Gold gains as lower US dollar, bond yields lift sentiment

Nov 23 – Gold prices rose on Thursday, hovering close to a key USD 2,000 per ounce level as a weaker US dollar and lower Treasury yields buoyed demand for bullion.

Spot gold was up 0.4% at USD 1,996.84 per ounce, as of 0747 GMT, after hitting a three-week high of USD 2,007.29 on Tuesday.

US gold futures GCcv1 gained 0.3% to USD 1,998.20.

“The anticipation of this effective pivot towards interest rate hike cycle peak is translating to ongoing softness in the US dollar and the longer-dated US yield which will support gold prices, at least in the short term,” said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.

The dollar was down 0.2% against its rivals after gains in the previous two sessions, making gold less expensive for other currency holders.

The benchmark US 10-year Treasury yields fell to a two-month low on Wednesday.

The number of Americans filing new claims for unemployment benefits fell more than expected last week, but that likely does not change the view that the labor market is slowing amid higher interest rates.

Traders widely expect the US Federal Reserve to leave rates unchanged in December but dialed back expectations of rate cuts in 2024 after the jobless claims data, according to CME’s FedWatch Tool.

Lower interest rates decrease the opportunity cost of holding gold.

Fed officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed on Tuesday.

Meanwhile, US consumers’ inflation expectations rose for a second straight month in November, a survey released Wednesday showed.

Spot gold may revisit its Nov. 21 high of USD 2,007.29 per ounce, as it may have completed a correction from this level, according to Reuters technical analyst Wang Tao.

Spot silver rose 0.4% to USD 23.70 per ounce, platinum climbed 0.4% to USD 926.11 and palladium was steady at USD 1,057.96.

(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich, Eileen Soreng, Sherry Jacob-Phillips and Sohini Goswami)

((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 9590227221; Reuters Messaging: Brijesh.Patel1.thomsonreuters.com@reuters.net))