Gold Price Rises Again Due to Two Key Factors

 

Gold prices (XAU/USD) have experienced a significant rebound after six consecutive days of declines. As of Tuesday (November 19) at 6:20 AM WIB, the price of gold was recorded at around $2,611 - $2,612 per ounce. This increase was driven by two main factors: the weakening U.S. dollar and escalating geopolitical tensions, particularly between Russia and Ukraine.

Geopolitical Impact and U.S. Dollar Weakness

Geopolitical tensions have provided strong support for gold as a safe-haven asset. One of the major drivers has been the U.S. government's decision under President Joe Biden to authorize the use of long-range missiles in Ukraine to target Russian territories. This decision raises the risk of further escalation in the region, especially after North Korea deployed thousands of troops to support Russia, adding pressure to an already tense global situation.

On the other hand, the U.S. dollar has weakened after reaching its highest level in a year. This decline can be attributed to fiscal and trade policies under President Donald Trump's administration, which are expected to trigger inflation. With the U.S. Dollar Index (DXY) falling by 0.38%, gold, priced in dollars, has become more attractive to holders of other currencies.

Fed Policy and Interest Rate Outlook

Although there were expectations of a rate cut by the Federal Reserve in December, recent data shows a decrease in the probability of a 25 basis point cut, from 82% to 62%. The market is awaiting the release of key U.S. economic data this week, including housing data, initial jobless claims, and the final reading of the University of Michigan's Consumer Sentiment Index for November.

Boston Fed President Susan Collins stated that there is no immediate need for a rate cut, while Chicago Fed President Austan Goolsbee emphasized that the central bank remains flexible in determining its future policy direction. In this environment, speculation about disagreements over the "neutral" interest rate could lead to a slower pace of rate cuts, a factor that investors are closely watching.

With increasing geopolitical tensions and a weakening U.S. dollar, the outlook for gold prices has become more appealing to investors seeking safer assets. However, the Federal Reserve's decisions regarding interest rates will continue to be an important factor influencing gold's movement in the near future.

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