Gold update: gold rises due to a declining dollar
In the last full trading week of this year, the gold price rose further. Gold is now well above the level of $2000 per troy ounce. The fear of high interest rates is fading away and the US dollar has fallen sharply in the fourth quarter of this year. Two factors that have pushed the gold price upward.
Both the 10-year yield in the US and the US dollar were much higher at the beginning of October. The interest rate was still around 4.9% at the beginning of October. The 10-year interest rate in the US has now fallen to 3.8%. The Dollar Index stood at 1.0689 in early October. This week the index closed at 1.0136.
Below is the graph of the Dollar Index:
The gold price has risen from $1821 to $2051 per troy ounce in the same period, which represents an increase of 12.6%. The Dollar Index fell 5.1%. The decline is stimulated by the increased chance of an interest rate cut by the Fed in 2024.
The pivot in 2024
The year 2024 will be the year in which central banks start cutting interest rates. Inflation has fallen sharply in recent months. Last Friday it emerged that core inflation in the US fell to 3.2% in November. The decline was greater than expected. This gives the FED more room to cut interest rates in 2024.
The final inflation figure for November was published in the eurozone this week. Inflation fell from 2.9% in October to 2.4% in November. Core inflation fell from 4.2% to 3.6%. The ECB will also carry out the so-called pivot in 2024. It is of course not known when the first interest rate cut will be introduced, but it is expected that the first interest rate cut will be implemented around the summer of next year.
Both the FED and the ECB will make a total of 8 interest rate decisions in 2024. The first interest rate decision in 2024 will be taken by the ECB on January 25. After this the Fed will follow with a decision on January 31. There is currently a good chance that both Central banks will leave interest rates unchanged in the first month of 2024.
Are you curious about the prospects for gold in 2024? At Doijer & Kalff we started activating our YouTube channel this week. The first recording is a fact and will be put online next week. The recording is about the prospects for gold in 2024. Subscribe here and don’t miss an episode. At the end of 2024 we will give away 25 grams of gold amongs our YouTube subscribers!
Agenda
No major news is expected this week. The Doijer & Kalff team wishes you a Merry Christmas! Subscribe on our YouTube-channel
Reinoud Bogert
Reinoud has been a partner at DK since 2016. He has over 25 years of experience in investments of which 15 years were specifically in investing in physical gold and silver.
Views based on published articles or news items are purely informative. The non-binding information should not be perceived as an offer, investment advice or any other financial service.
