XAU/USD: Gold Breaks 6-Month High at $2,018 on Rate Cut Outlook, Weaker Dollar

Lowering inflation is fueling bets that the Federal Reserve will bring interest rates down from their 22-year peak. Dollar fell.

• Gold prices XAUUSD pushed higher to start the week, climbing to a six-month high at $2,018 per ounce. Driving the fresh leg up were elevated expectations that the Federal Reserve has wrapped up its aggressive rate hike action as inflation keeps cooling. Adding to the momentum was a languishing US dollar.
• On a deeper level, market participants are pricing in a potential reversal of the Fed’s campaign that lifted interest rates to a 22-year high of 5.25% - 5.50%. In that context, the forward-looking valuation of the dollar took a hit with the dollar index DXY floating near a two-week low around 103.30.
• Gold, on the other hand, has gained just under 12% since the Israel – Hamas war broke out in early October. Even as the conflict has now reached a simmering point and hostages are being released, the precious metal is witnessing increased demand from institutions, central banks, and retail traders.