(London) Propelled by the decline of the American dollar, a currency weighed down by the prospects of a possible drop in interest rates, gold has experienced an ascent in recent days which has taken it to peaks not reached in more than six months.
Midday Wednesday, the price of the yellow metal hit a new highest level since early May, at US$2,066.60 per ounce.
Like other precious metals, gold “has been supported by two factors: bond yields and the US dollar, both of which are falling,” summarized Tickmill analyst James Harte.
The yellow metal, in fact, traditionally presents an opportunity cost compared to these two assets which are also considered safe havens in times of economic and geopolitical uncertainties, but which in their case earn interest for their holders.
However, both the greenback and U.S. Treasury yields fell following the release earlier this month of slowing inflation for October in the United States.
This announcement was followed by the publication of data showing an American economy losing steam and comments from officials of the American Federal Reserve (Fed) suggesting to the markets that the Fed had finished tightening its rates. .
On Tuesday, one of the Fed governors, Christopher Waller, said he was “increasingly convinced that (American monetary policy) is currently well placed to slow down the economy and bring inflation down to 2 %” in the United States, the target set by the American central bank.
Forex traders are now banking on their decline by May.
As a result, the US dollar collapsed to its lowest since August against the euro and the pound on Tuesday, before recovering its losses somewhat during Wednesday’s session.
Furthermore, “there is also a persistent fear that these (rate) reductions could be motivated by a weakening of the economy”, and “therefore, selling the US dollar and buying gold makes sense in many investors,” noted SPI AM analyst Stephen Innes.
Gold saw renewed buying at the start of the war between Israel and Hamas.
“There is deep uncertainty about what could happen to the region, which is driving up the price of gold,” noted Hargreaves Lansdown analyst Susannah Streeter.
