Gold hits fresh three-month highs on Fed rate prospects

Gold prices rose in European trade after a hiatus from gains yesterday, hitting fresh three-month highs as the dollar gives up ground again against major rivals.

The dollar continues to suffer consequences from US inflation data released last week which showed consumer prices slowed down sharply, in turn paving the way for less aggressive Fed policy tightening. 

Prices Today

Gold Prices rose 0.8% to $1784 an ounce, the highest since August 15, after closing flat yesterday on profit-taking.

The Dollar

The dollar index fell over 0.85% to three-month lows at 106.09 against a basket of major rivals, following the largest two-day loss since early 2020.

The selloff comes ahead of US producer prices data later today, expected to provide further clues on prospects of rate hikes in December.

Markets are pricing in a 89% chance of a 0.5% rate hike in December, and just an 11% chance of a 0.75% hike.

Fed Rates

Fed officials continue to hint at less aggressive pace of policy tightening in the months to come as inflation calms down.

Fed official Lael Bernard said it's possible the Fed will slow down its pave of rate hikes, but it still has more work to do.

The SPDR

Gold holdings at the SPDR Gold Trust rose 0.29 tones yesterday to a total of 910.41 tones.