Gold jumps to its highest level in 6 months

Gold prices surged to a six-month high in current trading, buoyed by the decline of the US dollar. The ongoing belief that the Federal Reserve has completed its interest rate hike cycle further contributed to the positive momentum in the precious metal. Investors are closely watching US inflation data scheduled for later this week.

The dollar index, having fallen over 0.1% against other currencies, remains close to its lowest point in more than two months. This decline in the dollar’s value makes gold more attractive for holders of other currencies. Market attention is now directed towards the revised US third-quarter GDP figures set to be released on Wednesday and the US Personal Consumption Expenditures Price Index on Thursday, which is the Fed’s preferred gauge of inflation.

Recent data indicating a slowdown in US inflation has strengthened the anticipation that the Federal Reserve might initiate monetary easing sooner than previously expected. Traders widely predict the Fed to maintain interest rates in December, with around a 60% likelihood of a rate cut in May next year, according to Investing Saudi Arabia’s Fed rate tracker. Lower interest rates reduce the opportunity cost of holding gold, as it doesn’t yield interest.

Spot gold’s upward momentum could carry it to a range of $2,026 to $2,032 per ounce after surpassing the $1,999 resistance level, as suggested by Reuters technical analyst Wang Tao. Investors are advised to stay vigilant given the potential for increased price volatility amid ongoing geopolitical tensions.