Investors broke their mixed sentiment yesterday as gold prices surge toward $4,100 in the latest anticipation of a Fed cut in next month’s monetary policy review in the U.S.
Dovish comments by Federal Reserve officials increased the likelihood of a 26-basis-point (bps) rate cut at the December meeting.
All Eyes on the Fed
According to the FedWatch Tool, market participants see a 76% chance of a December fed rate cut: a sharp jump from 42% a week ago.
Gold prices in the UAE surged on Wednesday. Twenty-four carat gold increased by AED1.75 to reach 501.50 whilst 22-carat gold rose by AED1.50 bringing the price to AED464.25.
Other Determinants: Softer Dollar
Besides the anticipated Fed Rate cut, a softer dollar is fuelling investor demand for gold priced in other currencies.
Yet any partial uptick in demand may be recalibrated by a resolution to the war in Ukraine as investors price in stability on sanctions and oil supply.Â
U.S. Data and GCC Gold Pricing
Ahead of December, investors will be watching U.S. economic data releases on jobless claims and producer price index numbers.Â
These reports will confirm any decision to cut interest rates in December’s Fed monetary review.
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