Gold heads for second straight monthly rise on Fed pause bets

Nov 30 – Gold slipped on Thursday but remained on track for a second straight monthly gain as expectations that the Federal Reserve may soon cut interest rates enhanced the appeal of non-yielding bullion.

Spot gold slipped 0.4% to USD 2,036.47 per ounce by 2:40 p.m. ET (1940 GMT) after hitting a near seven-month peak in the previous session. Prices have gained 2.7% so far this month.

US gold futures settled 0.5% lower at USD 2,057.2.

Contributing to gold’s slight dip, the dollar index rose for the day. But the currency was headed for its worst month in a year, while 10-year Treasury yields hit a two-and-a-half month low.

“Gold might be a little tired here but it’s had a very nice run. The pullback (in prices) should be limited to USD 2,015-USD 2,020 and no concerns will be felt unless we fall back below USD 2000,” Tai Wong, a New York-based independent metals trader.

Traders have advanced bets for a rate cut from an 80% chance in May to a one-in-two chance in March, according to CME’s FedWatch tool.

“We’re expecting gold prices to break into new highs in the first half of 2024 as we approach the Fed pivot and (with) the economy likely to slow,” said Daniel Ghali, commodity strategist at TD Securities.

Traders took stock of data showing US consumer spending rose moderately in October, while the annual increase in inflation was the smallest since early 2021. Jobless claims rose slightly.

The focus will be on comments from Fed Chair Jerome Powell on Friday.

J.P. Morgan in its 2024 commodities outlook highlighted that across commodities the only structural bullish call they held was on gold and silver.

Silver rose 0.9% to USD 25.22 per ounce and was set for its second straight monthly gain.

Platinum was down 0.3% at USD 929.09. Palladium dipped 1.4% to USD 1,013.15.

(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru. Editing by Jane Merriman and Arun Koyyur)