NEW YORK: Gold prices climbed to their highest level in six weeks on Monday, driven by expectations of a US interest rate cut this month and shifts in Federal Reserve leadership, while silver touched a record.
Spot gold was up 0.6 percent at USD4,255.98 per ounce, as of 1239 GMT, its highest since October 21. US gold futures for February delivery gained 0.8 percent to USD4,290.70.
Silver was up 1.9 percent at USD57.46 per ounce after hitting an all-time high of USD57.86 earlier.
“Market participants are now starting to price in again a rate cut for the Fed in December, as well the expectation is the new FOMC chairman will be a dove... that is supporting investment demand for gold,” said UBS analyst Giovanni Staunovo.
“Silver benefits from the same factor as gold, plus the expectation of further improving industrial demand next year.” Traders have increased December rate-cut bets over the last few weeks following softer US data, and dovish comments by several policymakers, including Federal Reserve Governor Christopher Waller and New York Fed President John Williams. Markets are pricing an 88percent chance of a rate cut, according to the CME’s FedWatch tool.
Lower borrowing costs tend to support non-yielding bullion. White House economic adviser Kevin Hassett said on Sunday that, if chosen, he would be happy to serve as the next Fed chairman. Like US President Donald Trump, Hassett believes rates should be lower. Trump is likely to announce a new chair before Christmas, said Treasury Secretary Scott Bessent.
The November ADP employment report on Wednesday and core US Personal Consumption Expenditures September figures on Friday could give markets further cues on the Fed’s policy path.
Meanwhile, the US dollar fell to a two-week low, making greenback-priced bullion cheaper for holders of other currencies. “We expect gold to rise to USD4,500/oz next year (and) silver to rise to USD60/oz next year,” said Staunovo. Among other precious metals, platinum rose 1.3 percent to USD1,693.95, while palladium gained 1.1 percent to USD1,466.28.