Gold futures rose on Monday to settle at their highest level in almost six weeks as uncertainty surrounding the U.S. Federal Reserve’s pace of interest-rate hikes has helped weaken the dollar and drive down interest rates.
Gold for February delivery GCG7, -0.15% gained $11.50, or about 1%, to settle at $1,184.90 an ounce. The settlement was the highest since Nov. 29, according to FactSet data. For the week through Friday, gold tallied a 1.8% advance, with back-to-back weekly gains.
Meanwhile, silver for March delivery SIH7, -0.35% rose 16.4 cents, or 1%, to finish at $16.683 an ounce after it logged a roughly 3.3% advance last week.
Wall Street “may be coming around to the notion that the [four to five] rate hikes the U.S. dollar is currently pricing in” is a bit too aggressive, “with the party line from Fed speakers in the last few days reeling that back in toward [two to three] hikes as more realistic,” Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch.
Higher interest rates can boost the dollar and make gold less competitive against interest-bearing investments.
On Monday, Boston Fed President Eric Rosengren said in a speech that economic conditions are likely to warrant “a still gradual but somewhat more regular” increase in the federal-funds rate. Atlanta Fed President Dennis Lockhart, meanwhile, said that the economy “appears solid” but is likely to grow at a moderate pace.
The ICE U.S. Dollar Index DXY, +0.01% a measure of the dollar against six rival currencies, fell by nearly 0.2%. to 102, though traded as high as 102.52. A stronger buck makes assets priced in the currency, including most gold on the global markets, more expensive to buyers using other monetary units. Gold and the dollar typically move inversely.
U.S. stocks traded on a mixed note Monday with the Dow Industrials’ DJIA, -0.38%20,000 target slipping further away.