The global gold price on the spot market has risen by 1.35 percent, reaching 2,040.87 US dollars per ounce, marking the highest level in over six months. This increase in gold price reflects the dynamic trade in the global market, influenced by a spectrum of economic, political, or market demand factors.
The U.S. Dollar and Federal Reserve's Role
The surge in the global gold price is propelled by a weakening U.S. dollar and expectations that the U.S. central bank, the Federal Reserve (The Fed), has capped its trend of raising interest rates. Market players are hopeful that the Fed will pause the high interest rate trend by maintaining its rates in the upcoming December.
They are also predicting a 50-50 chance that the Fed will start a policy of lowering interest rates from May 2024, according to the CME FedWatch tool.
Gold's Bullish Prospects
The short-term prospects for gold remain bullish, with the dollar index trending downward amid expectations that the Fed will no longer hike interest rates, and may even cut them in the spring. Investors will be closely monitoring the U.S. Personal Consumption Expenditures (PCE) data on Thursday, which is the Fed's preferred inflation indicator. The market's focus is also on the revision of the U.S. third-quarter GDP figures scheduled for release on Wednesday.
Gold Crosses a Psychological Level
On Tuesday, November 28, 2023, the global gold price rose above the psychological level of 2,000 U.S. dollars for the first time since March 2022. The gold futures price for December delivery on Comex New York rose by 0.8% to 2,028.40 U.S. dollars per ounce. The gold price is expected to continue its upward trajectory in the near future, with predictions of reaching 2,200 U.S. dollars by the end of this year.
Signaling a possible boon for gold, Federal Reserve Governor Christopher Waller revealed that there's a chance the central bank could lower the reference interest rate in the coming months if inflation continues to decline. This statement has acted as a positive sentiment for gold, reinforcing its standing as a hedge tool against market uncertainties and inflation.