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Gold has recovered from a recent drop due to lower US and UK inflation, with markets believing interest rates have peaked and might be reduced in 2024.

US inflation rose 3.2% in October from 3.7% in September, bringing the US closer to its 2% objective. The weakening dollar has driven gold to its highest level in almost a week, reaching $1,974.24.

The UK CPI also showed a low reading, with October CPI being 4.6% compared to 6.7% in September.

High interest rates may be hurting the UK economy, which was flat in Q3. Markets expect UK rates to fall in May 2024, similar to the US. The pound has had a wild week, with the lower dollar pushing it to a monthly high of $1.2504, but this morning's news pulled it back to $1.24597.

The strengthening pound pushed gold to a monthly low of £1,570.47, but gold recovered somewhat this morning and is back over £1,580. While currency strength has driven gold prices in 2023, gold and silver have been waiting for interest rates to peak and then decrease, which could lead to more gains in 2024 if the trend continues.