According to data from the Kitco exchange, gold spot prices rose $2.6/oz at the New York close compared to the previous session’s close, settling at $2,636.6/oz.
Meanwhile, in the Asian market at around 9 am Vietnam time, the gold spot price decreased by $12.8/oz compared to the US session close, equivalent to a decrease of 0.44%, trading at $2,624.1/oz.
“The slight adjustment we’ve just witnessed is the market’s reaction to economic data, mainly driven by an increase in consumer income,” said Phillip Streible, Chief Market Strategist at Blue Line Futures.
“If consumption continues to rise, even in the face of inflation, the Fed may find it challenging to cut interest rates drastically,” he added.
According to the minutes of the Fed’s latest monetary policy meeting, released on Tuesday, Fed officials expect to continue cutting interest rates in the future but at a slower pace.
Mr. Streible predicted that the gold price could rise to $3,000/oz in the first two quarters of 2025 unless inflation surges unexpectedly, forcing the Fed to raise interest rates again. The market is currently betting on a 70% chance that the Fed will cut interest rates by 0.25 percentage points at next month’s policy meeting.
The weakening US dollar in recent sessions has eased pressure on gold prices. The Dollar Index, which measures the strength of the US dollar, fell 0.8% to 106.08 on November 27, its lowest level in two weeks, according to data from MarketWatch. The index hit a two-year high of 107.5 last Friday.
On November 27, before the inflation data was released, New York gold prices rose 1%, recovering from a $100/oz drop earlier in the week – the most substantial decline in over five months due to concerns about reduced safe-haven demand for the precious metal following the announcement of a ceasefire between Israel and the armed Hezbollah organization in Lebanon.
“The ceasefire between Israel and Hezbollah has only partially reduced the overall geopolitical risks in the world, but there is certainly some optimism here,” said senior strategist Peter Grant of Zaner Metals.
Mr. Grant assessed that investors remain anxious about the Russia-Ukraine war, so gold prices could continue to fluctuate in the short term within the range of $2,575-2,750/oz.
“Looking at today’s developments, gold prices are likely to remain volatile in the coming period ahead of the inauguration of US President-elect Donald Trump and due to developments in the Middle East,” said Hamad Hussain, economist at Capital Economics.
A report by Swiss bank UBS suggested that gold prices would continue to fluctuate in the short term “amid mixed signals on inflation, interest rates, geopolitics, and the upcoming US trade policy.” However, UBS analysts believe gold has further upside potential in the long run.
“We see scope for gold prices to rise, with a target price of $2,900/oz between now and the end of 2025. Gold remains a useful hedge against geopolitical risks and fiscal concerns,” the report said.
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