(MENAFN) On Tuesday, gold prices experienced a surge, driven by a drop in the US dollar and diminishing Treasury bond yields. Investors eagerly awaited the release of the minutes from the latest US Federal Reserve meeting, seeking insights into potential shifts in interest rate expectations.
In spot transactions, gold climbed 0.6 percent to reach USD1,988.29 per ounce by 0133 GMT, while US gold futures saw a 0.5 percent increase, reaching USD1,990.10. Analyst Edward Meier highlighted the ongoing decline in dollar yields and US bonds, coupled with robust demand from central banks, as key factors propelling gold's upward trajectory. Meier noted, "Dollar yields and US bonds continue to decline. Demand from central banks is also very strong. All of these things stimulate gold. The market is reconsidering this decline that we witnessed yesterday."
The US dollar approached its lowest levels in over two and a half months, reflecting investor expectations of a potential decline in US interest rates in the coming year. A weakened dollar tends to make gold more affordable for holders of other currencies. Meanwhile, US 10-year Treasury bond yields lingered near their lowest points in two months, a trend initiated the previous week.
Investor focus intensified as the minutes from the Federal Reserve's recent meeting were set to be disclosed at 1900 GMT. Signs of decelerating inflation in the United States reinforced the belief that the Federal Reserve has concluded its cycle of interest rate hikes.
CME's Fed Watch service indicated widespread anticipation that the US Federal Reserve would maintain interest rates at their current levels during the December meeting. Additionally, there was a more than 50 percent likelihood perceived by the market of a 25 basis points interest rate cut by May.
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