Gold futures settled higher on Monday amid optimism that major central banks are approaching the end of tightening cycles.
Data showed on Friday that the Fed’s favorite inflation gauge slowed to a two-year low in June, easing concerns about the outlook for interest rates.
A firm dollar limited the yellow metal’s upside. The dollar index, which dropped to 101.53 around mid morning, recovered to 101.82 later on in the session, gaining nearly 0.2%.
Gold futures for December ended higher by $9.30 at $2,009.20 an ounce.
Silver futures for September ended up $0.472 at $24.972 an ounce, while Copper futures for September settled at $4.0080 per pound, gaining $0.0815.
“Gold prices are attempting a bullish break out as optimism grows that the major central banks are all approaching the end of their tightening cycles,” says Edward Moya, Senior Market Analyst at OANDA. “The RBA might be one-and-done this week and the BOE might be done after a couple more. The Fed is clearly waiting on the data, but they might be done if inflation plays nice.”
Moya added that golds’ rally could extend if growth prospects turn sour. “If Wall Street starts aggressively in rate cuts by the first quarter of 2024, gold could easily find a home above the $2000 level,” he says.