Gold traded near the highest level since May as investors continued to bet that the Federal Reserve will start cutting interest rates next year.
Traders are increasingly positioning for a hard economic landing and aggressive Fed policy easing next year, with speculators in the US Treasury market now the most bullish on record, according to a weekly survey conducted by JPMorgan Chase & Co. since 1991.
Treasury yields continued to decline, even while two regional Fed chiefs offered diverging views on the trajectory of US inflation Wednesday. While Atlanta Fed President Raphael Bostic said he’s growing increasingly confident that inflation is firmly on a downward path, his Richmond counterpart Thomas Barkin told CNBC the central bank should keep the option to hike.
Gold has rallied more than 11% since early October, initially fueled by haven buying in the wake of the Israel-Hamas conflict. Prices are now within sight of the record high set during the pandemic, supported by a drop in the yields paid by global bonds that are on track for their best month since 2008.
Data Wednesday showed the US economy growing faster than first estimated in the third quarter, while consumer spending rose less than expected. Later in the week, investors will look to the Fed’s preferred measure of underlying inflation for further clues on the direction of interest rates.
Spot gold rose 0.2% to $2,045.80 as of 1:07 p.m. in New York. It’s now roughly $30 below its all-time high.
--With assistance from Swansy Afonso, Eddie Spence and Sybilla Gross.
