Gold at its 2-week High on Hopes of Slower Rate Hikes

Gold reached a 2-week high on Thursday on a weaker dollar and hopes of the US Federal Reserve System’s slower rate hike.

Gold futures for February delivery were trading higher by 1.76% to $1,790.80 per ounce on Thursday’s trading session.

Meanwhile, the dollar index fell by 0.42%, making gold more attractive for non-greenback holders.

The fall of the greenback came after Fed confirmed on Wednesday that it plans to slow down the rate hike pace.

In light of the announcement, the market now expects a 50-basis point rate hike in Fed’s December meeting.

Meanwhile, World Gold Council’s latest data revealed that the central banks continued to increase gold reserves.

Over the third quarter of 2022, the central banks bought 399.00 tons of gold, which was 341% higher than the year prior.

According to the data, the largest buyers were India, Qatar, Turkey, and Uzbekistan.

However, there was still a substantial amount that some central banks had yet to publicize.

Although the WGC did not name which countries these central banks belonged to, it was widely known that China and Russia do not publish such information.

Given the current environment, analysts believe that the rush in gold buying is likely to continue.

Historically, such a pace in accumulating gold reserves was last seen in 1967.

Chinese Gold Demand Rose, Covid Risk Remains

Due to improved demand, Chinese gold has recently traded well at international prices.

Previously, Chinese gold demand has suffered due to Covid lockdowns.

The most notable period was the second quarter when Shanghai and Beijing were under strict restrictions.

During that time, WGC noted that Chinese consumer demand had fallen by 23%.

However, the latest data from WGC revealed an elevated price of Shanghai-London gold price during the National Day holiday in October.

Despite this, the uncertainty in China’s Covid policies still threatened gold sales, as its direction is being driven by consumer demand.

This sentiment was in line with Commodity Exchange data that shows the investor’s lack of interest in gold.