ALBAWABA - Gold hit its highest level in two months, reaching $1,772 per ounce on Friday, with gains around five percent, rebounding again, as the dollar tumbled to a more than two-month low.
Consumer Price Index (CPI) report showed a decrease in inflation in the US market to 7.7 percent on an annual basis during October, which fueled continued optimism about easing the pace of raising US interest rates as inflation fell to 7.9 percent, with a decrease in the US bond yield (for 10 years) by 28 points to close at 3.83 percent.
Propped up by these economic developments, gold was able to gain investors' confidence again after the US dollar's exchange rate fell against other major currencies by 1.6 percent at 106.44 points.
“Soaring prices are choking the global economic growth, which could also impact demand for metals,” Fawad Razaqzada, market analyst at City Index and FOREX.com, told MarketWatch.
Gold had a stellar week, but everything hinges on the dollar, he said. “The greenback is not dead, I don’t think,” Razaqzada added. If the dollar does not see significant weakness from here, that “should hold gold back”.
“The one eyed is still the king in the land of the blind, so I won’t expect to see further significant weakness in the dollar,” said Razaqzada, loosely referencing an old proverb to show that the greenback is still a standout despite its recent pullback.
Global markets expect an increase in US interest rates by 50 points at the meeting of the US Federal Reserve (Central Bank) in December, an increase that indicates restoring control over inflation level, thus easing raising interest rates on the US dollar, which means more recovery in gold prices.
The gold futures contracts (for December delivery) rose at a settlement by 0.9 percent, equivalent to $15.70 per ounce, at the end of last week's trading.
