The price of gold jumped by 1.3%, reaching its highest level since November 8, as the further escalation of the Russian-Ukrainian war offset the pressure on the metal from the strengthening of the US currency. Since the beginning of the week, gold prices have risen by 5.1%, which is the largest increase since the beginning of October 2023.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.42% to 107.42. Earlier today, the index reached its highest level since November 11, 2022. A stronger U.S. currency makes bullion more expensive for overseas buyers.
Recently, demand for gold has increased sharply amid geopolitical tensions, economic risks and a low interest-rate environment. Yesterday, Chicago Federal Reserve President Austan Goolsbee reiterated his support for further interest rate cuts, expressing openness to a more gradual approach. According to the CME FedWatch Tool, markets see a 56.2% probability of a 0.25% rate cut in December (compared to 61.9% a week ago).
Gradually, the focus of investors' attention is shifting to US inflation data, namely the PCE price index, the publication of which is scheduled for Wednesday. Meanwhile, today the US PMI indices for November will be presented, as well as the consumer sentiment index for November. Investors will also be watching Fed Governor Michelle Bowman's statements to get further guidance on the prospects for monetary policy easing. Experts warned that if the Fed skips or suspends a rate cut in December, it could trigger some pullback in gold prices.