Gold firms in weak trading, bets on US interest rate cut

Gold prices stabilized today, Wednesday, in light of weak trading volume and expectations that the Federal Reserve (US Central) will reduce interest rates in the first quarter of 2024, and the weakness of the dollar in general.

The week is likely to witness weak trading as traders around the world spend vacations until the beginning of the new year.

According to Reuters, the price of gold in spot transactions stabilized at $2,066.86 per ounce by 0150 GMT. US gold futures rose 0.4% to $2,078.20 an ounce.

Gold is heading to achieve gains of more than ten percent this year, which is the best since 2020 thanks to the trend to buy safe haven assets, a trend driven by wars in Ukraine and the Middle East, in addition to bets on lowering US interest rates.

US data issued last week indicating a decline in inflation reinforced financial markets’ expectations that the US Central Bank would cut interest rates next March. Traders now expect about an 80% chance of a rate cut, according to the CME Feed Watch service.

Lower interest rates would reduce the opportunity cost of holding non-yielding bullion

The dollar index rose 0.1%, but remained near the lowest level in five months and is on its way to its worst annual performance since 2020.

The weak dollar makes gold more attractive to holders of other currencies

In terms of other precious metals, silver rose in spot transactions by 0.2% to $24.25 per ounce, while platinum settled at $978.56. Palladium fell 0.3 percent to $1,176.49.