Key Takeaways
- Gold prices increased by more than 1% on Thursday.
- The US dollar weakened after reaching an 18-month high.
- Investors are assessing the likelihood of a Federal Reserve interest rate hike this month.
Gold prices rebounded by more than 1% on Thursday, recovering from a one-week low reached the previous day. The price of spot gold rose to $4,158.63 per ounce by 0257 GMT, after dipping to its lowest level since October 7.
The US dollar weakened after hitting an 18-month peak overnight, making gold more affordable for buyers in other currencies. This movement in the dollar is seen as a key factor in the gold price recovery.
Traders are now pricing in a 27% chance of a Federal Reserve interest rate hike later this month, up from 22% before the release of the September consumer price data, which showed a significant increase in gasoline prices.
Kyle Rodda, a market analyst, commented, 'We’re seeing here is just the symptoms of a market uncertain about US interest rate policy, and that is resulting in a bit of volatility.'
The focus now turns to the Producer Price Index and retail sales data, both due for release at 1230 GMT, which could further influence market sentiment.
Among other precious metals, silver gained 1.1% to $56.26 per ounce, while platinum and palladium also saw modest increases of 0.3% and 1.3%, respectively.
Despite gold's status as an inflation hedge, higher interest rates reduce its appeal as they do not pay interest. The market is closely watching these factors as they could impact future price movements.
US Federal Reserve President Mary Daly suggested that further interest rate hikes may be necessary, while Vice Chair Michelle Bowman indicated that there is still time to observe before any additional action is taken.
We’re seeing here is just the symptoms of a market uncertain about US interest rate policy, and that is resulting in a bit of volatility.
Kyle Rodda, Market analyst
