Gold Settles Higher As Dollar Turns Weak

Gold prices climbed higher on Monday, recovering well after settling at a two-week low on Friday. A weak U.S. dollar and a significant drop in bond yields contributed to the yellow metal’s uptick.

Gold prices fell last week as the dollar surged higher amid signs the Federal Reserve will continue to raise rate aggressively to tame inflation.

The dollar fell today and bond yields dropped after the new British Finance Minister Jeremy Hunt scrapped most of the policies announced in Prime Minister Liz Truss’s budget on September 23.

The dollar index dropped to 111.92, down more than 1.2% from Friday’s close.

Gold futures for December ended higher by $15.10 or about 0.9% at $1,664.00 an ounce. Gold futures, which shed about 1.7% on Friday, posted a loss of 3.5% last week.

Silver futures for December ended up by $0.648 at $18.719 an ounce, while Copper futures for December settled at $3.4155 per pound, down $0.0080 from the previous close.

British finance minister Hunt said income tax cuts the government had planned would be shelved indefinitely, and he reversed plans to slash dividend tax rates and scrap alcohol duties.

The measures announced by Hunt reverse more of Prime Minister Liz Truss’s growth program, which prompted a selloff in UK assets after it was unveiled by her then-chancellor Kwasi Kwarteng. Hunt took over as finance minister after Truss fired Kwarteng on Friday.

In economic news, a report released by the Federal Reserve Bank of New York showed regional manufacturing activity has contracted by more than expected in the month of October.

The New York Fed said its general business conditions index slid to a negative 9.1 in October from a negative 1.5 in September, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to dip to a negative 4.0.

Markets now await a slew of U.S. economic data, including reports on industrial production, manufacturing activity, housing starts and existing home sales this week.

Speeches by some Fed officials, including Neel Kashkari, Charles Evans and James Bullard will also be in focus.

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