Gold scales two-week high after Powell's remarks on interest rates

Gold prices rose in European trade for the third straight session, scaling two-week highs and almost hitting multi-month highs as the dollar declines against major rivals. 

Dollar's decline comes following Fed Chair Jerome Powell's remarks about slowing down the pace of rate hikes starting December. 

Prices Today

Gold prices rose 0.85%% to $1,783 an ounce, the highest since November 16, after rising over 1% yesterday, the second profit in a row following Powell's speech and dollar's decline. 

Monthly Trading

Gold prices spiked 8.2% in November, the first monthly profit in eight months, and the largest since July 2020. 

Gold snapped the longest monthly losing streak in October, which extended for seven months, plumbing back then 2-1/5 year lows at $1,614.

The latest huge monthly profit came on aggressive short-covering after gold prices hit multi-year lows in October, while US inflation slowed down considerably as well, paving the way for a less aggressive policy stance by the Fed. 

The Dollar

The dollar index fell over 0.5% on Thursday, sharpening losses for another session and plumbing four-month lows at 105.30 against a basket of major rivals.

Fed Chair Jerome Powell said the pace of rate hikes will be slowed down starting from the December meeting as the bank rebalances its risks.

Following the remarks, markets now put an 80% chance of a 0.5% rate hike by the Fed in December, and a 20% only for a 0.75% rate hike.

Estimates

We here expect gold prices to continue moving positively with a solid chance of scaling four-month highs and climbing above $1,800 once more. 

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at 908.09 tones.