Slowing rate hike favors gold prices

Bullion prices breached the $1,750 key ounce level on Thursday, with gains consolidating after minutes of the US Federal Reserve’s last meeting pointed to slower interest rate hikes.

Spot gold rose 0.4% to $1,755.73 an ounce, while US gold futures rose 0.6% to $1,755.90.

Low interest rates tend to raise demand for bullion relative to other interest-bearing assets. High interest rates have supplanted gold’s traditional status as a hedge against high inflation and other uncertainties this year, as they become a higher opportunity cost of holding a non-yielding asset.

Minutes of the Fed’s Nov. 1-2 meeting showed that a “substantial majority” of Fed policymakers agreed that slowing the pace of interest rate hikes was “likely to be appropriate soon.”

Market activity was expected to be relatively subdued with the US Thanksgiving holiday.

Meanwhile, demand for physical gold in Asia remained soft this week, with premiums in top center China falling further as fresh COVID-19 restrictions dampened activity, while high domestic prices deterred most buyers in India.

Spot silver was up 0.5% at $21.62 an ounce, platinum was up 0.3% at $999.38, and palladium was up 0.7% at $1,894.75.