Gold rose on Thursday as investors awaited a speech by Federal Reserve Chairman Jerome Powell for some further clarity on interest rates, while palladium, used in car catalysts, fell below the $1,000 an ounce level for first time since 2018.
THE golden spot rose 0.7% to $1,963.49 an ounce, after hitting its lowest level since Oct. 18 earlier in the session. The US gold futures they gained 0.6% to $1,968.90.
“Today’s move in gold is just a dollar story and there is also a technical recovery as we come off an aggressive sell-off,” said Bart Melek, head of commodity strategies at TD Securities.
The dollar index was flat after rising 0.2% earlier.
“Gold could move above $2,100 in the second quarter of 2024 and the catalyst will be the Fed needing to start cutting interest rates,” Melek noted.
The silverfor its part, rose 1.1% to $22.77 an ounce.
Gold has fallen nearly $40 after hitting $2,000 last week as escalating tensions in the Middle East fueled inflows into the safe-haven investment.
A number of Fed officials this week maintained a balanced tone on future rate decisions, but noted they would focus on macroeconomic data and the impact of higher long-term bond yields.
Investors see a 90% chance the Fed will leave rates unchanged in December and about a 70% chance of at least one cut by June next year, according to the CME FedWatch tool.
Lower interest rates boost the appeal of gold, a zero-yield asset.
The palladium slipped more than 5% to $996.67 an ounce after hitting a 2018 low of $991.53.
“Large short positions have exacerbated downside risk for palladium,” said Standard Chartered analyst Suki Cooper.
“In the near term, supply cuts have not materialized and demand has been lower than expected following the US auto workers’ strike.”