Gold prices surged to a seven-month high of $2,040 an ounce Tuesday — their highest price since early May.
The latest price driver for gold appeared to be continued weakness in the US dollar, which again dropped in value against other major currencies on Tuesday, including the euro, UK pound and Canadian dollar.
The further drop comes in a month in which the value of the US dollar has fallen from just under 95 euro cents to less than 91 euro cents, in a bullish move for dollar-denominated assets such as gold and silver.
The gains have left gold prices very close to their May 2023 levels of almost $2,045 an ounce.
Recent economic data from the US has painted a picture of a soft economy, leading to expectations that the US Fed will not raise interest rates any further. Moreover, the markets appear to be anticipating potential rate cuts in 2024, and this is broadly supportive of non-yield-bearing assets like gold.
Gold’s all-time high stood at just under $2,075 an ounce in August 2020, in the midst of the coronavirus pandemic and government lockdowns, which prompted investment flows into safe havens.
On the macro side, Wednesday will see the release of German inflation rate data and updated figures for US GDP growth, providing further clues on future monetary policy.
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