Gold gains over 1.50% to trade above $4,130 as a 6% slump in WTI crude oil drags the US Dollar Index down 0.46% to 101.81, offsetting rising Fed rate hike expectations.
WTI tumbled nearly 6% to $85.00 after President Trump called further strikes on Iran highly unlikely and reports emerged that US-Iran nuclear talks had been revived, with Washington reportedly agreeing to a proposal allowing uranium enrichment to 3.67%. Easing geopolitical risk removes the supply-disruption premium. Any collapse of the talks would reverse the move.
Gold climbs over 1.50% above $4,130 as the Dollar weakens after WTI tumbled nearly 6% to $85.00, outweighing hawkish Fed repricing. Central bank buying adds support, with the PBoC adding nearly 25.8 metric tons in October, its largest monthly purchase in three years. Rising December hike odds (84%) and hot CPI forecasts argue against follow-through.
The Dollar Index is down 0.46% to 101.81 as WTI's nearly 6% slump to $85.00 weighs on the currency through their positive correlation, despite stronger jobs data. Rising December rate hike odds of 84% and a CPI print expected at 3.9% could quickly rebuild Dollar strength.
The 10-year yield rises two basis points to 4.889% as traders price in further tightening after last Friday's payrolls report crushed estimates and the unemployment rate fell from 4.2% to 4.1%. With December hike odds at 84% and CPI due Tuesday, upward pressure on yields persists.
Gold prices climbed over 1.50% on Monday, defying hawkish Federal Reserve sentiment as a sharp decline in oil prices pressured the US Dollar. While markets now price an 84% probability of a December rate hike following a strong jobs report, central bank buying from the PBoC and a weaker Greenback provided support for the precious metal.
The threat of further US strikes on Iran faded after Trump called them 'highly unlikely', and reports emerged that US-Iran nuclear talks had been revived, easing fears of supply disruption.
The oil rout dragged the US Dollar down 0.46% to 101.81, and Gold is priced in dollars, so a weaker Dollar pushed it above $4,130 despite the 84% odds of a December rate hike.
A move above the 100- and 50-day moving averages at $4,191 and $4,201 could open the way to $4,300; below $4,100 and $4,000, sellers could target the November 4 low at $3,919 and the October 30 low at $3,879.
Yes, the DXY fell 0.46% to 101.81 on Monday because the oil-driven slump dragged it lower, even though markets now price an 84% chance of a December Fed rate hike.
It climbed two basis points to 4.889% because the strong jobs report pushed the odds of a December Fed rate hike to 84%, leading traders to price in further tightening.