The Effect of a Weak Dollar on Gold Prices: The Rise Continues

Gold Prices Rise with Weak Dollar

Gold showed a slight increase on Tuesday due to the weakening of the US Dollar. Investors are focusing on critical employment data that will shape the Federal Reserve's policy decisions.

Spot Gold Prices

Spot gold opened the day at $4,311.64/ounce, up 0.1% in the Tuesday morning, but later dropped 0.40% to $4,287.78/ounce. Since the beginning of last year, it has seen an increase of over 64%, breaking numerous records.

US Dollar and Market Expectations

The US Dollar is trading around its lowest levels in two months in Asian markets. Tim Waterer, Chief Market Analyst at KCM Trade, stated, "The continued weakness of the dollar is supporting gold prices. Markets may be underestimating the Fed's potential interest rate cuts next year."

Interest Rate Cut Expectations

According to CME's FedWatch tool, investors are assessing the probability of a 25 basis point rate cut in January at 76%. Some analysts are expecting two rate cuts. Additionally, this week's data is expected to provide clues about how quickly the Fed may loosen its policy in 2026.

Employment Reports and Analyses

The employment reports for October and November set to be released later on Tuesday are expected to contain some missing data due to the government shutdown. Analysts at ANZ point out upside risks, indicating that gold could test the level of $5,000 per ounce next year.

Other Precious Metals

Spot silver fell 1.2% to $63.11/ounce, trading just below the record of $64.65. Spot platinum increased 1.9% to $1,816.15, while palladium rose 0.6% to reach $1,576.25.