Gold prices extended their rally as the Federal Reserve bets on interest rate cuts boosted gold's attractiveness

(1) Gold prices rose on Tuesday amid thin holiday trading, helped by a weaker dollar and lower bond yields, as expectations rose that the Federal Reserve would cut interest rates as early as March next year. (2) Spot gold is currently trading around $2064.28 an ounce, up about 0.56%. It hit a more than two-week high of $2,070.39 in the previous session. (3) Yeap Jun Rong, market strategist at IG, said: "Last Friday’s US personal consumption expenditures data fell short of expectations, validating the dovish Intrerest rate expectations priced in by the market, and gold prices resumed their upward trend after entering the new week. ” (4) Data on Friday showed that U.S. prices fell month-on-month in November for the first time in three-and-a-half years, pushing a further slowdown in year-on-year gains below 3%, which boosted financial markets’ expectations that the Federal Reserve will cut interest rates in March next year. (5) According to CME Group’s FedWatch tool, traders are currently pricing in an 89% chance of a Fed rate cut in March. Cutting interest rates drops the opportunity cost of holding gold as a non-yielding asset. (6) The U.S. dollar index fell 0.1%, making gold more attractive to holders of other currencies, while U.S. 10-year bond yields are still hovering near five-month lows, also dropping the opportunity cost of holding gold