Gold up as US dollar, Treasury yields ease

GOLD PRICES firmed on Tuesday as the US dollar and Treasury yields slipped while investors strapped in for a bunch of US economic data due this week that could provide more clarity on the US Federal Reserve’s interest rate path.

Spot gold was up 0.6% at $2,038.59 per ounce by 2:23 p.m. ET (1923 GMT). US gold futures settled 0.6% higher at $2,052.10.

The gains were helped by a 0.4% decline in the dollar index, while benchmark US 10-year Treasury yields were hovering near their lowest levels since July.

Investors are buying gold as there are fewer incentives for people to get rid of it, with the market betting the Federal Reserve will cut interest rates before they achieve their 2% inflation target, said Bart Melek, head of commodity strategies at TD Securities.

Fed Chair Jerome Powell said last week that the Fed’s monetary policy is likely done with a tight monetary policy, with discussion on cuts to borrowing costs moving “into view.”

Traders are looking towards a slew of US economic data this week, including the November core personal consumption expenditure index report due on Friday, considered to be the Fed’s preferred measure of underlying inflation.

It’s a question of when the Fed will lower its interest rates, so we see no reason for any significant downward correction of the gold price in the foreseeable future, Commerzbank said in a note.

Spot silver gained 1.1% to $24.03 per ounce, while platinum was up 1.3% at $957.08. Palladium climbed 3.2% to $1,222.14, rising for the seventh consecutive session. —