Gold rises on declining dollar and bond yields

Gold rebounds

Gold prices pick up again, taking advantage of the dollar’s decline and yields of the US ten-year bonds, which reached their highest level in 10 months. Resurrecting itself from the 1900 hurdle ahead of the FOMC minutes later today.

Gold prices rose by 0.2% in spot trading, to trade near $1905, while US gold futures rose by 0.1% to $1936 per ounce.

Gold received some support from the decline in the US dollar, and it wasn't the only asset that saw an increase during today's trading. The British pound also rose following the release of UK inflation data.

Despite the slowdown in inflation growth in Britain, it remains high and above the desired levels. This has prompted the markets to prepare for further interest rate hikes in the near future.

Recent statistics confirmed a decrease in holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, to its lowest level since January 2020. No inflows have been reported since late July.

The US dollar stabilizes

Economic data continues to support the US dollar, as the markets anticipate the Federal Reserve keeping interest rates at high levels for an extended period. As retail sales confirmed the resilience of the US economy.

Even if interest rates will not be raised at the same pace, positive economic data rules out the possibility of the Federal Reserve resorting to interest rate cuts in early 2024, particularly after the data confirmed inflation stability at 3.2%, while the Federal Reserve targets interest rates at only 2%