Proactive Investors - A fall in the US dollar helped spur gold prices to an eight-month high on Monday after economic data late last week raised hopes that the Federal Reserve would opt for a slowdown in the pace of interest rate hikes.
Spot gold edged 0.3% higher to $1,870.43 per ounce following a 2% jump on Friday after the data showed a slowing in US wage growth and a contraction in services industries in December.
The figures put the US dollar under pressure as investors bet that the peak in interest rates would be lower than currently forecast and those falls continued today with the greenback down 0.8% to its lowest levels in seven months.
This makes gold cheaper for overseas investors.
“Interest rates are looking like they’re going to continue higher. But they do have a limit of what they can do and the market is pricing that in,” said Bob Haberkorn, senior market strategist at RJO Futures.
“We are also seeing some flight to safety. Technically, gold looks like it has more room to go because it’s been strong through all these resistance points that we continue to see,” he added.
Money market bets show a 75% chance of a 25-basis point hike at the Fed’s February policy meeting and investors will be keenly eyeing comments by Fed chair Jerome Powell at a bank conference in Stockholm on Tuesday for further clues as to the Fed’s intentions along with US CPI data due later this week.