Gold prices extended gains to a fourth session on Wednesday as expectations of slower U.S. rate hikes lowered Treasury yields while lifting bullion to a fresh eight-month peak.
Spot gold rose 0.4% to $1,885.01 per ounce by 1109 GMT, its highest level since early May. U.S. gold futures advanced 0.7% to $1,889.10.
Benchmark U.S. 10-year Treasury yields eased on the day, reducing the opportunity cost of holding non-yielding gold.
Gold bulls are very much in the driving seat, and if December inflation does indeed cool and increase the expectations of low rates, then we should see the dollar off and by extension, gold higher, said independent analyst Ross Norman.
“On a broader level, it is encouraging to see net long positions on COMEX rise to the highest since June 2022 while redemptions in gold exchange traded funds have also eased, giving scope for further price rises as the tide turns more favourable,” Norman added.
The metal has recovered more than $270 from September lows on expectation the Fed would slow the pace of its rate hikes.
But, the risk is that, if CPI surprises to the upside, it could push gold prices back down, said Michael Hewson, chief markets analyst at CMC Markets.
On the technical front, the next level of resistance is at $1,900, Hewson added.
Rising interest rates tend to dent bullion’s appeal as the metal pays no interest.
Fed Governor Michelle Bowman said on Tuesday that the U.S. central bank will have to raise rates further to combat high inflation and that will likely lead to softer job market conditions.
Meanwhile, in the physical market, Indian gold refiners struggle as grey market operators offer hefty discounts.
Elsewhere, spot silver rose 1.2% to $23.9 per ounce, on track to snap a two-day losing streak.
Platinum climbed 1.2% to $1,093.51, and palladium added 0.2% to $1,784.83.