The price of gold increased by 0.4%, helped by the news that the Central Bank of China, a key consumer of gold, resumed purchases of precious metals in November after a six-month break. The price increase was also caused by reports that Syrian rebels seized the capital Damascus and President Bashar al-Assad fled to Russia.
Experts said the resumption of gold purchases could support Chinese investor demand, which has been subdued since the Central Bank of China suspended its 18-month series of purchases in May. In general, the increased purchases, especially after Trump's recent election victory, reflect the Central Bank's proactive approach to ensuring economic stability in a changing global environment.
Market participants are also preparing for the publication of US inflation data, which will help determine if we will have a hawkish cut from Fed next week, which could still see the U.S. dollar stronger and gold prices weaker if the Fed were to set the stage for a pause in the rate-cutting process into early-2025. According to the CME FedWatch Tool, markets see a 87.1% probability of a 0.25% rate cut in December (compared to 61.6% a week ago), while the probability of an additional rate cut in January is 26.1%.
Since the beginning of 2024, gold prices have increased by about 28% amid active purchases of precious metals by central banks, easing monetary policy and geopolitical tensions. Gold is seen as a safe-haven investment during times of economic and political uncertainty and thrives in a low-interest rate environment.