Demand for gold surged to an 11-year high last year. This is due to large-scale purchases on the back of high activity by retail investors and a slowdown of ETF outflows.
The value of gold on Thursday exceeded key levels amid the dollar’s weakening. The minutes from the latest meeting of the Federal Reserve indicated a growing number of members who support a slower pace of increasing interest rates.
Markets are now assessing the likelihood of a relatively smaller 50 basis point increase in central bank rates. Investing.com predicts that the expected hike should occur in December, which would be nearly 80%.
Markets will be paying attention to November's CPI inflation data, which will be released next month. The level of inflation decline will be evident from these readings.
Nevertheless, a small Fed rate hike will be beneficial to the metals markets going forward. That is because the sharp rise in interest rates has greatly increased the opportunity cost of holding non-interest bearing assets.