Gold topples dollar, crypto towards best week in over two years

By Onome Amuge

Gold rose towards its best weekly performance in 30 months, buoyed by a drop in US inflation data which triggered expectations that the Federal Reserve may slow the pace of interest rate hikes. The precious metal was also boosted by a weakened US dollar and a meltdown phase in the crypto market, analysts observed.

US gold futures’ benchmark December contract finished the week’s trading up $15.70 or almost 1 percent at $1,769.40 per ounce on New York’s Comex. It further rose $92.80 or 5.5 percent in the week, its highest since a 6.5-percent rise on April 3, 2020. Spot gold, which is more closely followed than futures by some traders, also rose to $1,766.59 an ounce.

Following the upward trend, Craig Erlam, analyst at online trading platform OANDA, expressed confidence that gold could get to $1,800 per ounce at least after clearing resistance at between $1,770 and $1,780.

“Gold bulls have been waiting for this week for a long time: a week in which the Fed signaled a potential slowing of rate hikes and the CPI data displayed a significant and broad-based decline,” Erlam said.

Gold’s resurgence comes after the latest US Consumer Price Index (CPI) for October registered its slowest annual growth in nine months, expanding just 7.7 percent over a 12-month period, against the previous yearly growth of 8.2 percent to September.

Market analysts noted that the biggest takeaway for the markets was a possibility of a more flexible Federal Reserve in the coming months, sending the US dollar lower and giving gold room to rally.

“U.S. consumer prices rose much less sharply than expected in October, thereby dampening Fed rate hike expectations, putting pressure on the U.S. dollar and causing U.S. bond yields to fall noticeably,” said Commerzbank analyst Carsten Fritsch.

Fritsch added that as a result, the gold price climbed to $1,760 per troy ounce to reach its highest level since the end of August.

Gold’s rally also coincided with another massive selloff in the crypto space as digital assets like Bitcoin and altcoins suffered heavy price losses.

Commenting on this, Everett Milman, market expert at precious metals dealer Gainesville Coins, said crypto volatility has a much broader reach this time around, which is why gold stands to benefit more than in the earlier months of the crypto decline.

Analysts said that the following week’s gold price action will get its direction mainly from the US dollar, considered the most heavily weighted driver for gold’s ability to continue to rally.

“The dollar is the main thing I am watching because we’ve seen such a big move. Does that trend continue? Is the dollar going to fall or hold? That will play a big role in whether gold can hold on to its gains,” Milman noted.