Gold prices rose further on Tuesday to hit their highest level in nearly three weeks, helped by growing expectations of another U.S. Federal Reserve interest rate cut in December and signs of an end to the U.S. government shutdown.
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Gold prices rose further Tuesday to hit their highest level in nearly three weeks, helped by growing expectations of another U.S. Federal Reserve interest rate cut in December and signs of an end to the U.S. government shutdown.
Spot gold was up 0.4% at $4,131.32 per ounce, as of 0636 GMT, hitting its highest since October 23. U.S. gold futures for December delivery rose 0.4% to $4,137.50 per ounce.
The U.S. Senate passed a deal on Monday that would restore federal funding and end the longest government shutdown.
Key economic indicators such as the non-farm payrolls report have been delayed due to the shutdown. A government reopening in the coming days will offer more clarity on the U.S. economic outlook and the Fed’s interest rate path.
“The idea that the shutdown is ending was really more met as lifting a level of uncertainty that gave markets permission to reengage with what has been one of the main speculative narratives this year,” said Ilya Spivak, head of global macro at Tastylive.
“The bias for the rest of the year is at this point favouring the upside still. At this point, the path of least resistance for gold is back to October’s high, and then we might be heading higher thereafter.”
Last week, data showed the U.S. economy shed jobs in October amid losses in the government and retail sectors.
U.S. consumer sentiment weakened to a 3-1/2-year low in early November amid worries about the economic fallout from the shutdown, a survey showed on Friday.
Traders are pricing in a roughly 64% probability that the Fed will cut rates by 25 basis points next month, according to CME Group’s FedWatch tool.
Fed Governor Stephen Miran said on Monday a 50-bp rate cut would be appropriate for December, noting that inflation is falling while the unemployment rate is drifting higher.
Non-yielding gold tends to do well in a low-interest-rate environment and during economic uncertainties.
Elsewhere, spot silver gained 0.8% to $50.94 per ounce, platinum rose 0.4% to $1,584.40 and palladium climbed 1.4% to $1,435.43.