FRANKFURT / LONDON (IT BOLTWISE) – The price of gold is showing positive development in December despite a strong dollar and uncertain interest rate cut prospects. Analysts expect gold prices could post a third straight monthly gain, while oil prices are under pressure due to weak economic data from China and a possible OPEC+ production expansion.
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Recent developments in the financial markets have brought the price of gold into focus. Despite a strong dollar supported by uncertainty over a possible interest rate cut in December, gold prices are showing a positive trend. The dollar index recently hit its highest level in three months, making gold more expensive for buyers of other currencies. Still, gold prices appear to be on track to record their third consecutive monthly gain, currently up four percent.
A key factor in the uncertainty on the markets is the changing assessment of the US Federal Reserve’s interest rate policy. According to CME Group’s FedWatch tool, the probability of a rate cut in December is now 66.8 percent, down from over 96 percent a week earlier. This uncertainty has strengthened the dollar, which in turn makes the price of gold less attractive from a yield perspective.
At the same time, the current inflation data for the Eurozone are the focus of interest. According to a survey by Trading Economics, analysts expect that both general inflation and core inflation have fallen by 0.1 percentage points to 2.1 and 2.3 percent pa, respectively. This data could provide further information about the European Central Bank’s future monetary policy and thus also influence the price of gold.
While the price of gold is benefiting from the current market conditions, things are looking less rosy for the price of oil. Oil prices fell in early Friday trading, heading for their third straight monthly decline. In addition to the strong dollar, weak economic data from China is also weighing on the mood on the oil markets. In addition, the OPEC+ alliance is considering a moderate increase in production in December at its meeting on Sunday, which could put further pressure on the price of oil.
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