The price of gold rose on Monday, reaching its highest level since early July amid speculation that the US Federal Reserve would delay raising interest rates until much later than previously forecast.
Gold for December delivery, the most actively traded contract, surged $9.10 or 0.8% to $1,165.00 per troy ounce on the Comex division of the New York Mercantile Exchange. December gold reached an intraday high of $1,168.60, its highest level since July 7.
With Monday’s gains, gold prices have rallied in four of the past five sessions and are up more than $50 since October 1.
Meanwhile, the US dollar weakened slightly on Monday following sharp declines the previous week. The dollar index, a weighted average of the greenback against a basket of six currencies, slipped 0.1% to 94.73. The dollar index is down 1.5% since the start of the month.
Firmer gold prices have also been accompanied by a surge in global stocks, fueled by improving sentiment that the Federal Reserve will not raise its key overnight rate this year. The Fed voted against a rate hike in September and has just two policy meetings planned this year.
Given that gold doesn’t bear interest, it’s generally considered a more attractive investment when interest rates are low. The Fed has maintained record low interest rates since the height of the financial crisis in December 2008.
Precious metals were higher across the board on Monday, with silver rallying 14 cents to $15.96 per troy ounce. Copper prices advanced $2.10 to $243.50 a pound. Platinum spot climbed $11.85 to $994.80 per troy ounce.
After gaining more than 8% last week, US crude futures were little changed on Monday. The West Texas Intermediate (WTI) benchmark for US crude traded at $49.64 a barrel after briefly surpassing the $50 mark earlier in the day. Brent crude, the global benchmark, also pared gains, trading at $52.71 a barrel. Brent had rallied to a daily high of $53.31.
Global equities were mixed on Monday. Asian shares rallied sharply, led by a 3.3% gain for China’s Shanghai Composite Index. Tokyo’s Nikkei index rallied 1.6%.
With the exception of the German DAX, the major averages were down throughout Europe. London’s FTSE 100 Index declined 0.8%. The CAC 40 Index in Paris also fell 0.5%.
The pan-European STOXX 600 Index was down 0.4%.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.