Gold futures climbed above $1,800 an ounce on Thursday for the first time since mid-August, as the U.S. dollar and Treasury yields extended a retreat following remarks a day earlier by Federal Reserve Chairman Jerome Powell indicating policy makers would likely deliver a smaller rate increase this month.
Price action
- Gold for February delivery GC00 GCG23 rose $54.10, or 3.1%, to $1,814 an ounce on Comex. Most-active gold futures haven’t traded above $1,800 since Aug. 15, FactSet data show. Prices marked a November gain of more than 7%
-
March silver
SIH23,
+4.13%
rose 90.4 cents, or 4.2%, to $22.685 an ounce, after posting a monthly rise of nearly 14%. -
January platinum
PLF23,
+1.49%
was up 1.9% at $1,059.10 an ounce, while March palladium
PAH23,
+0.48%
rose 2.1% to $1,906 an ounce. -
March copper
HGH23,
+1.22%
rose 1.2% to $3.783 a pound.
Market drivers
Federal Reserve Chairman Jerome Powell indicated Wednesday the central bank may decide to raise interest rates at a slower pace at its next policy meeting. Treasurys rallied, pulling down yields, while the dollar retreated.
Traders believe that “an era of aggressive interest rate hikes is over, and only smaller rate hikes will be taking place.” said Naeem Aslam, chief market analyst at AvaTrade, in a market update.
Treasury yields continued to pullback in Thursday dealings, while the ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, was down 1%.
“Gold likes the combination of lower interest rates and a weaker dollar,” said Marc Chandler, chief market strategist at Bannockburn Global Forex, in a note.
Lower yields lowers the opportunity cost of holding nonyielding assets like gold, while a lower dollar makes commodities priced in the unit less expensive to users of other currencies.
U.S. data on Thursday showed the Federal Reserve’s favorite inflation gauge rose a modest 0.3% in October, adding another piece of evidence that points to slowly easing price pressures. The yearly rate of inflation slowed to 6% in October from 6.2% in the prior month and a 40-year high of 7% last summer.
Going forward, traders will be watching the U.S. nonfarm payrolls data due out Friday, he said. “The number is certainly going to increase the volatility.”
