Gold prices witnessed an upward trend on Tuesday morning, fueled by a weakening dollar and falling treasury yields. However, the precious metal still sits below its record high set last Friday.
February gold contracts experienced an increase of $5.30, reaching $2,047.50 per ounce. This follows a record-breaking closing price of $2,059.60 on Friday.
The rise in gold prices coincides with a decline in the dollar and yields. This development reflects the growing anticipation among traders that the Federal Reserve will commence lowering interest rates in the new year. Despite this speculation, the central bank has yet to provide clear indications of reversing its rate hikes until inflation reaches its target of 2%.
The ICE dollar index dipped by 0.03 points to 103.68, while the US two-year note witnessed a yield decline of 2.9 basis points to 4.616%. Similarly, the yield on the 10-year note fell by 4.7 basis points to 4.212%.
While the weakening dollar and yields have boosted gold prices in the short term, the future trajectory of the precious metal remains uncertain. The Fed’s stance on interest rates and inflation will be key factors influencing gold’s performance in the coming months.