Gold began to rise in price after US bond yields fell

The price of gold continues to rise as falling US bond yields make the precious metal a more attractive investment option.

Investors are awaiting the Federal Reserve’s decision to form an opinion on the outlook for monetary policy. The price of the precious metal rose 0.2% to $1,982.49 an ounce. US futures rose 0.2% to $1,997.70.

The yield on 10-year US bonds fell further after the release of inflation data. In the 12 months through November, US producer prices rose 0.9%, following a 1.2% rise in October.

Producer price index data came in slightly below expectations, and traders quickly turned their attention to Federal Open Market Committee Chairman Jerome Powell’s announcement this afternoon, Kitco Metals senior analyst Jim Wukoff told Reuters. The market is expecting Powell to say at a news conference that the Fed will remain vigilant in its fight against inflation, which other traders in the past have called a kind of “hawk pause”he added.

The Fed is expected to leave rates unchanged at 5.25-5.50%, with CME’s FedWatch tool estimating the likelihood of a May rate cut at about 79%.

“The key will be the Fed’s median point for 2024. The market wants three cuts, but I don’t think it will get them. But I see a rebound for precious metals given the recent decline, unless the Fed is truly hawkish.” independent trader from New York Tai Wong.

Lower interest rates make holding gold more attractive. The dynamics of gold may also be affected by the meetings of the European Central Bank and the Bank of England, which will take place on Thursday.

Silver fell 0.7% to $22.60 an ounce, platinum fell 0.3% to $926.51 and palladium fell 0.2% to $977.39.

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