Gold futures settled modestly higher on Tuesday as the dollar turned weak after bond yields dropped as dovish comments from Federal Reserve officials lowered expectations for further interest rate hikes.
The yellow metal’s rise was also due to safe-haven demand amid concerns about the ongoing Israel-Hamas war.
The dollar index dropped to 105.66 a little past noon, after having advanced to 106.25 in the Asian session.
Gold futures for December ended higher by $11.00 at $1,875.30 an ounce.
Silver futures for December ended up $0.029 at $21.953 an ounce, while Copper futures for December settled at $3.6340 per pound, down $0.0120 from the previous close.
Top Fed officials cautioned on raising rates further and highlighted the financial tightening from the recent rise in treasury yields.
Fed Vice Chair Philip Jefferson said on Monday that the central bank is “in a position to proceed carefully in assessing the extent of any additional policy firming that may be necessary.”
“Higher term premiums result in higher term interest rates for the same setting of the fed funds rate, all else equal. Thus, if term premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening,” Dallas Fed President Lorie Logan said.
Investors now look ahead to the release of U.S. CPI data and minutes of the Fed’s September monetary policy meeting this week for further direction.