Gold Prices Rose to Six-Month High of USD 2,013/oz

Gold prices rose to a six-month high on Monday, November 27, as growing confidence that the U.S. Federal Reserve has finished raising interest rates and a weaker dollar supported the bullion prices.

The rapid rise of gold is supported by the ongoing moderation in USD, which fell this month and lost approximately 3% against the basket of 6 major currencies. Disappointing economic data in the U.S. have increased confidence that lending rates in the country may no longer ascend this year. Attention has also shifted to U.S. inflation data, which should be published later this week.

Investors and traders widely expect the Fed to leave rates unchanged in December, while the probability of a rate cut next May is about 60%, according to the CME FedWatch instrument. Lower interest rates reduce the alternative costs of owning interest-free gold.

Economic data that will be released in the U.S. this week, both on economic growth and inflation, will either confirm or deny the arguments in favor of whether gold will remain above $2,000/oz. Market attention is now shifting to revised Q3 U.S. GDP data, which is due on Wednesday, and the U.S. PCE price index – the preferred indicator of Federal Reserve inflation – on Thursday, respectively.

Earlier this month, the still-memorable inflation report showed a weakening consumer inflation, reinforcing hopes that the Fed could start easing monetary conditions earlier than expected.