The most liquid gold contract closed sharply higher on Thursday, December 1, in response to a speech by Federal Reserve Chairman Jerome Powell on Wednesday, who pointed to a slowdown in high interest rates in the US. As a result, the dollar, the currency in which gold is quoted, depreciated, which led to an increase in metal prices. In addition, Treasury yields have declined, which has also given strength to a commodity that competes with bonds in search of safe assets.

Elsewhere on Comex, the metals division of the New York Mercantile Exchange (Nymex), gold for March delivery rose 3.14% to $1,815.20 a troy ounce.

The Federal Reserve Chairman’s speech on Wednesday once again showed how much the gold markets are focused on US monetary policy, Julius Baer said. “Prices rose when he said the Fed could slow interest rate hikes as early as next month,” he notes, referring to the US monetary policy outlook remaining a priority in the gold markets.

“In our view, this seems like an overreaction, given also that markets were already moving in anticipation of a slowdown in rate hikes earlier this month. Aside from the weakening dollar, we continue to see short covering in the futures market as the dominant driver of these movements,” the Swiss bank analyzes.