Mumbai: Gold prices are on track for their fourth monthly increase as investors continue to expect the United States Federal Reserve to cut interest rates in December. Analysts say growing confidence about a rate reduction and a weaker US dollar have helped push gold higher in recent weeks.
Spot gold recently touched a two week high after a strong rally earlier this week. Futures trading also saw gains even after a temporary outage at CME Group caused disruptions in the global derivatives market.
Silver prices also moved higher during the week and reached a new record level as investor demand for precious metals strengthened.
Market experts say expectations of lower interest rates are the main reason behind the upward trend. When rates fall the return on government bonds and other fixed income assets becomes less attractive making gold a safer option for investors.
A softer US dollar has added further support. Since gold is traded in dollars a weaker currency makes it cheaper for buyers in other countries.
However retail demand in some Asian markets including India has slowed due to higher prices. Traders say many buyers are waiting to see whether prices settle before making purchases even as the wedding and festival season continues.
Analysts believe the coming weeks will be important. Investors are watching new economic data from the United States which could confirm or delay the expected interest rate cut. A clearer signal from the Federal Reserve could push gold either higher or lower depending on the outcome.
Some global banks have already raised their long term forecasts. Deutsche Bank recently said gold prices could average four thousand four hundred fifty dollars per ounce next year if current trends continue.
For now gold remains firm and many analysts expect volatility as the market waits for the Federal Reserve’s next move.