However, the stability of the US dollar and rising expectations from the US Federal Reserve (Fed) are limiting further price increases.
Fed interest rate expectations limit gold's upside potential
The US dollar, which hit a two-month high last week, has since consolidated its gains, and there is little to lift gold prices. The Fed is expected to cut interest rates by as much as 25 basis points in November, leaving little room for the dollar to weaken significantly.
“The Fed's cautious approach to monetary easing is likely to limit any significant gains in gold,” analysts said.
U.S. Treasury yields fell for the second straight day after weaker-than-expected economic data. The Empire State Manufacturing Business Index in October was minus 11.9, the lowest level since May, highlighting the slump in the U.S. manufacturing industry.
Lower yields are pushing gold higher as its non-capacity nature makes it more attractive in a low interest rate environment.
Geopolitical tensions drive demand for safe havens
Continued geopolitical tensions in the Middle East continue to drive demand for gold. Conflict in the region has increased risk across markets, with investors turning to safe-haven assets for protection.
