Gold prices, which had fallen to a two-month low, rebounded more than 1% on Monday as the rally in the U.S. dollar paused and investors waited for remarks from Federal Reserve officials. At 1027 GMT, spot gold was up at $2,591.43 per ounce, while US gold futures rose to $2,595.80 per ounce.
Key Takeaways:
Gold prices surged 1% after six consecutive sessions of lose.
Dollar rally slows, making gold more appealing to other currency-holding buyers.
Analysts predict volatility and profit-taking as the year ends.
Fed officials’ comments on rate cuts could push gold prices further.
Gold’s fundamentals remain solid despite recent pullbacks.
Gold Surges Forward as Dollar Weakens.
Gold has faced challenges recently, falling to a two-month low due to the U.S. dollar’s rise, driven by expectations of fewer interest rate cuts from the Fed. However, the dollar steadied on Monday after a 1.6% rise last week, making gold more appealing to buyers holding other currencies.
Independent analyst Ross Norman noted that while gold might not have reached a solid floor, opportunistic buying is providing support. He anticipates continued volatility into the year’s end and expects profit-taking, regardless of the Fed's decisions in December.
Federal Reserve Outlook Drives Gold’s Recovery
The market is closely watching the Fed this week, as multiple central bank officials are scheduled to speak. Their comments could provide clarity on the potential for future rate cuts, which would benefit gold, as it doesn’t pay interest.Lower rates traditionally increase demand for gold, and last week’s soft inflation data has encouraged some Fed officials to hint at rate cuts, further supporting gold’s recovery.
Trump’s Economic Policies and Their Impact on Gold
While gold is recovering, analysts believe that a possible return to the White House for Trump could lead to further dollar strength in the short term. However, his inflationary policies might eventually benefit gold, as investors may turn to the precious metal for protection against inflation.
Goldman Sachs remains optimistic, seeing the recent sell-off as an opportunity to buy gold, with a target of $3,000 per ounce by 2025. Central bank buying, geopolitical risks, and strong long-term fundamentals are seen as key drivers for gold's price growth.
Conclusion:
Gold prices are rebounding as the U.S. dollar’s momentum slows, with investors awaiting further guidance from the Fed. Although market conditions remain volatile, many analysts are optimistic about gold’s long-term prospects, especially with the possibility of rate cuts and inflation pressures on the horizon. Gold remains a key asset to watch as 2024 unfolds.
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