According to the Shahr-e-Bourse, the price of an ounce of gold in cash transactions increased by 0.7% to $4,142.83, and futures contracts for December delivery also increased by 0.7% to $4,148.50.
The Senate’s approval of a federal budget deal announced on Monday ended the country’s longest government shutdown, and key economic data that had been delayed by the shutdown is expected to be released soon. This could shed more light on the U.S. economic outlook and the likely path of the Federal Reserve’s interest rate hike.
Ilya Spivak, global head of macro at TasteLive, believes gold’s bullish trend will continue for the rest of the year. Data last week showed that the U.S. economy shrank in October, despite a decline in government and retail employment. A recent survey also showed U.S. consumer confidence fell to its lowest level in nearly three and a half years, reflecting concerns about the economic fallout from the government shutdown.
Interest rate outlook and its impact on the gold market
The CME Fed Watch tool shows that markets are pricing in a 64 percent chance of a December rate cut, a scenario that typically favors gold, a non-yielding metal. Stephen Miron, the new member of the Federal Reserve Board, said on Monday that a 50 basis point cut in December would be appropriate, adding that inflation would be subdued but unemployment would rise.
In other precious metals, silver rose 0.5 percent to $50.80 an ounce, platinum rose 0.3 percent to $1,581.60, and palladium rose 1.2 percent to $1,431.45.
