After a downfall at the beginning of this month, gold prices hit a six-month high on Tuesday, with significant help from the weak dollar.
Although gold was slightly down on Wednesday (0.09%), the price has stabilised at around 65,952 per kilo.
Gold has been rising consistently for the past two weeks, jumping to its highest value on Tuesday ($65,732 per kilo).
The weakened US dollar is a key factor supporting the elevated status of gold prices, as it has been hovering at its lowest point in three months.
The US Dollar Index marked a three-month nadir at 102.47, prompted by a continued decline in the benchmark 10-year US Treasury bond yield, which reached 4.27%. This yield level hasn’t been observed since September 15.
“A cheaper greenback makes gold less expensive to buy for foreign investors,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
She further added that “the eruption of conflict in Israel and Gaza sparked the most recent rally. Although there are hopes a truce can be extended, there is deep uncertainty about what might lie ahead for the region, which is making the goldedge higher.”
The investor’s attention now turns to the potential interest rate cuts on the horizon.
As indicated by CME Group’s FedWatch Tool, there is now approximately a 40% likelihood that the Federal Reserve might initiate interest rate cuts as early as March.
Some analysts speculate that the perceived dovish stance of the Federal Reserve is going to uphold the value of gold.
Third-quarter U.S. GDP data could also positively impact prices.