Gold Price Touches New Peak, What Is Pushing Rates Higher?

Gold prices have touched an eight-month high on Monday as dollar slipped on bets for slower US interest rate hikes, according to a Reuters report. Investors also cheered leading bullion consumer China reopening its borders.

It is worth noting that spot gold surged 0.4% to $1,873.72 per ounce by 0951 GMT, its highest since May 9, 2022. US gold futures gained 0.4% to $1,877.40, added the Reuters report.

The weaker dollar is likely the main factor lifting gold, and investors have also started slowly increasing their holdings in exchange-traded funds (ETFs), indicating positive sentiment in gold, UBS analyst Giovanni Staunovo said.

Making gold cheaper for overseas buyers, the dollar index raised hopes for a slowdown in the pace of rate hikes by the Federal Reserve, as per the Reuters report.

Elevated rates dampen interest in non-yielding gold, as they did for the majority of 2022.

"Data suggests that the Fed's cumulative tightening in 2022 is starting to have its effects felt on the economy and that the Fed can afford to slow its pace of tightening," said OCBC FX strategist Christopher Wong.

Traders will now assess Fed Chair Jerome Powell's speech at a central bank conference in Stockholm on Tuesday and U.S. consumer price index data due later this week, added the Reuters report.

Meanwhile, in India the price of gold has also surged. The price of 10 gram of 22K gold is Rs 51,600 after gain of Rs 300 while the price of 10 gram of 24k gold is Rs 56,290 after a rally of Rs 330.