Gold prices rose in weak trading today amid growing expectations for a rate cut by the Federal Reserve in March, the Christmas holidays in many countries and a drop in the dollar and bond yields. Meanwhile, tensions in the Middle East stemming from Israel’s ongoing aggression in the Gaza Strip have prompted investors to turn to gold as a safe haven.
In Tuesday’s trading, spot gold rose 0.5% to $2,063.22 per ounce (at the time of writing), after hitting its highest level in more than two weeks at $2,070.39 in the previous session.
U.S. gold futures rose 0.25% to $2,074.20 an ounce, with lower interest rates reducing the opportunity cost of holding non-yielding gold.
According to the CME and FedWatch tools, traders are highly expecting the Fed to cut interest rates in March (89%).
The U.S. dollar index fell 0.04% to 101.66, making gold more attractive to holders of other currencies, while the benchmark 10-year U.S. Treasury yield fell to 3.882%.
Why are central banks around the world increasing their gold reserves? (Al Jazeera)
price drop
Data released last Friday showed that U.S. prices fell month-on-month in November, the first decline in three and a half years. The annual inflation rate fell further below 3%, strengthening market expectations for the Federal Reserve to cut interest rates in March next year.
On Monday, the 25th, Shiite militants supporting Gaza launched a bomb-laden drone attack, injuring three US soldiers. Subsequently, the US military launched retaliatory air strikes in Iraq. Meanwhile, on the same day, Iranian military adviser Razi Mousavi was killed in an Israeli airstrike on the outskirts of the Syrian capital Damascus. This is indicative of the growing geopolitical tensions that began after the Palestinian resistance to the Israeli occupation launched Operation “Aqsa Flood.” It heralds an expansion of the war, with the aggression against Gaza continuing and Yemen’s Houthis threatening to close the Bab el-Mandeb Strait at the entrance to the Red Sea from the south.
Gold is considered a safe-haven asset during times of geopolitical uncertainty.
Markets in Australia, New Zealand, Hong Kong and the euro zone were closed on Tuesday for the Christmas holiday.
As for other precious metals, at the time of writing, silver spot trading was up 0.6% at $24.344 an ounce, platinum was up 0.46% at $975.10, and palladium was down 0.7% at $1,194.09.
2023-12-26 16:16:38
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