After leaving interest rates alone at last week's FOMC meeting, investors are focusing on upcoming comments by multiple Federal Reserve officials this week including Chairman Powell.

As of 5:10 PM EDT, the most active December futures contract is up $5.70 (0.29%) and is fixed just below $2000 at 1999.20. But in the case of today’s rise in gold, the devil is in the details. All of the gains in gold over the last two days are directly tied to a major drop in the dollar index.

As of 5:35 PM EDT, December gold the most active futures contract is moderately higher up six dollars or 0.30%, and fixed at $1993.50. Yesterday the November FOMC meeting concluded which strengthened the dollar dramatically, taking gold lower.

As anticipated, Federal Reserve members unanimously voted to maintain its benchmark Fed funds rate at its current level  between 5 ¼% and 5 ½% for the second consecutive FOMC meeting. This second rate hike pause occurred after the Fed implemented 11 consecutive rate hikes beginning in March 2022.

Gold futures basis the most active December contract gained the second largest percentage and dollar gain in a single month this year. The largest single monthly gain in gold futures this year occurred in March. In March of this year, the most active gold contract (this data is from a continuous futures contract) gained $131.90, or 6.9% with a volume of 5.539M.

Approximately three weeks after the militant group Hamas staged a surprise attack killing over 1,400 Israeli civilians, the Israeli military moved ground forces expanding their activity into Gaza. The increased tensions in the Middle East resulted in gold futures surging above $2000 per ounce.

According to a report in Reuters News, “The U.S. economy grew at its fastest pace in nearly two years in the third quarter as higher wages from a tight labor market helped to power consumer spending, again defying dire warnings of a recession that have lingered since 2022.

As of 4:00 PM EDT, gold futures basis the most active December contract is up $5.80 and fixed at $1992. Gold futures did trade to $1998.60, just $1.40 under the key psychological of $2000 per ounce. On Friday, October 20 gold futures traded to an intraday high of approximately $2008. However, the move was unsustainable with gold closing at $1994.40.

Investors have momentarily shifted their attention away from the geopolitical crisis in the Middle East to focus on two important reports. Beginning on Thursday at 8:30 AM EDT, the government will release a series of reports, with the most important component being the latest GDP for the third quarter (Q3).

Gold prices, both physical and futures, are down about $8.00 to $9.00 today. However, one of the largest contributors working to lessen the price decline is dollar weakness. The dollar has lost 0.62% or 65 points, taking the dollar index to 105.335, a low not seen since Thursday, October 12. Dollar neutrality or strength today would have magnified the downside pressure considerably.