(London) Propelled by the decline of the dollar, a currency weighed down by the prospects of a possible cut in American rates, gold has experienced an ascent in recent days which has taken it to peaks not reached in more than six months.
At the start of Wednesday’s session, the price of the yellow metal reached a new highest level since the beginning of May, at $2,052.03 per ounce, and then remained around $2,040.
Like other precious metals, gold “was supported by two factors: bond yields and the US dollar, both of which were falling,” summarized Tickmill analyst James Harte.
The yellow metal, in fact, traditionally presents an opportunity cost compared to these two assets also considered as safe havens in times of economic and geopolitical uncertainties, but which in their case earn interest for their holders.
However, both the greenback and US Treasury yields fell following the release earlier this month of slowing US inflation for October.
This announcement was followed by the publication of data showing an American economy losing steam and comments from officials of the American central bank (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 objective set by the American central bank.
Currency traders are now banking on their decline by May.
As a result, the 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 dollar and buying gold makes sense in the eyes of many investors,” underlined Stephen Innes, analyst at SPI AM.
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.