Gold hit a fresh 6-month high of $2,018/oz on a weaker dollar and yields

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Vrasidas Neofytou
Head of Investment Research

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Gold hit a fresh 6-month high of $2,018/oz on a weaker dollar and yields

Gold shines again, as the price of the yellow metal advanced to a six-month high of $2,018/oz, and Silver to $24,70/oz on Monday morning, driven by a softer U.S. dollar and falling bond yields on growing bets that the Federal Reserve was done raising interest rates.

Gold jumped above the key $2,000/oz psychological level early in Asia this morning, benefiting from the ongoing weakness on the DXY-U.S. dollar index, which hit a fresh 3-month low of 103.30, almost 3% down since topping at 107 in early October.

Gold, 2-hour chart

At the same time, Gold has received a further boost from the falling U.S. bond yields, with the yield on the 10-year U.S. Treasury declining as low as 4.36% last week, retreating from multi-year highs of 5% hit in mid-October.

A renewed U.S. dollar selling and sluggish bond yields could trigger a new rally above the $2,020/oz level, which might push the price of gold to retest the all-time highs of $2,070/oz, which had hit 3 times since 2020.

Traders have turned bearish on the dollar and bond yields on increasing speculation that the Federal Reserve has concluded its interest rate hikes after a series of softer inflation data in October, which has proven advantageous for the yellow and silver metals.

Hence, the worsening economic conditions around the world (China, UK, and Eurozone) due to higher inflation and surging borrowing costs, are raising expectations for an early rate cut by the major central banks, which is driving up safe-haven demand for gold and silver.

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