GOLD SOARS ON WEAKER DOLLAR

GOLD PRICES jumped 2% yesterday to climb above the key $1 800 (about R30 608) an ounce pivot, as the dollar weakened on prospects of slower rate hikes from the Federal Reserve (Fed) and signs of cooling US inflation.

Spot gold rose 1.6% to $1 797.35 an ounce by 5.25pm, reaching $1 803.94 earlier in the session, while US gold futures gained 3.1% to $1 813.80 an ounce.

“We’ve established a price uptrend on the daily chart which invited technical-based buying... we’re seeing the dovish lean by (Fed Chair Jerome Powell) supporting the commodity markets and seen the US dollar index back off,” said Jim Wyckoff, senior analyst at Kitco Metals.

Powell on Wednesday said it was time to slow the pace of coming interest rate hikes, but added that controlling inflation “will require holding policy at a restrictive level for some time”.

The dollar fell more than 1% to a near four-month low against its rivals, making gold less expensive for overseas buyers.

Traders are currently pricing in a 91% probability that the Fed will increase rates by 50 basis points on December 14.

Further supporting bets around slower rate hikes, data showed moderation in the inflation trend last month, boosting interest in gold, analysts said.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion.

On the technical front, gold is trading above its 50-day, 100-day and 200-day moving averages, which is considered a bullish signal by traders.

Focus now turns to the US Labour Department’s non-farm payrolls (NFP) data due today.

Elsewhere, spot silver jumped 1.4% to $22.51 an ounce, platinum gained 1.2% to $1 045.13 an ounce while palladium dropped 0.1% to $1 879.53 an ounce.