Gold Prices Rise Today, Supported by Dollar's Decline
Gold prices increased today, Monday, driven by the decline of the US dollar, as investor expectations of a reduction in American interest rates this week intensify. The yellow metal rose by approximately 0.5% in spot transactions to reach $4,215.69 per ounce. Meanwhile, US gold futures contracts (for December delivery) stabilized at $4,244.80 per ounce. The US dollar retreated to near its one-month low, reached on December 4, making gold, which is priced in US currency, cheaper for holders of other currencies. According to Tim Waterer, Chief Market Analyst at KCM, "The core Personal Consumption Expenditures (PCE) data remained unchanged, pushing the Federal Reserve towards an interest rate cut this week. The anticipation of easing monetary conditions is driving gold prices up." He added, "The expected interest rate cut this week is keeping the dollar in check and, at the same time, giving gold prices some room to rise." US consumer spending increased moderately in September after three consecutive months of strong growth, suggesting a loss of economic momentum at the end of the third quarter, where a weak labor market and rising cost of living slowed down demand. This follows private sector employment data, which showed the largest decline in over two and a half years last month. Comments from several US Central Bank officials in favor of monetary easing have strengthened expectations of an interest rate cut. According to the CME's FedWatch tool, there is an 88% probability that the interest rate will be reduced by 25 basis points at the US Central Bank meeting on December 9-10. Lower interest rates tend to support non-yielding assets, such as gold.
