Gold prices continued to increase in the trading session on Tuesday, reaching a nearly three-week high, thanks to expectations that the US Government could soon reopen to help restore economic data flows - an important factor before the Federal Reserve (FED) plans to cut interest rates next month.
Spot gold prices rose 0.5% to $4,137.06/ounce at 8:16 a.m. GMT, after reaching $4,148.75 at one point - the highest since October 23, but still below the $4,381.21/ounce record set on October 20.
US gold futures for December increased by 0.5%, to 4,143.80 USD/ounce.
Gold prices are attracting a return to cash flow as the market is more focused on US fiscal concerns, as a government reopening could lead to new spending packages funded by additional loans, said Ole Hansen, head of commodity strategy at Saxo Bank.
The US Senate has previously approved a deal on Monday to end the longest government shutdown in the country's history, which has delayed many important economic data, including the non-farm payrolls report - a key indicator for the economy.
The bill will be moved to the Republican-controlled US House of Representatives, where Speaker Mike Johnson said he would like to pass the bill as early as Wednesday.
The governments reopening will also help restore economic data sources, which could strengthen expectations for a rate cut in December, Hansen added.
Meanwhile, the Fed's policymakers are still divided on the monetary policy roadmap, making it difficult for Chairman Jerome Powell to reconcile differences after two interest rate cuts since the beginning of this year.
Fed Governor Stephen Miran said on Monday that a 50 basis point interest rate cut could be appropriate at the December meeting.
Meanwhile, data released last week showed signs of stress in the US economy, as the labor market lost jobs in October and consumer confidence fell to a three-and-a-half-year low as of early November.
According to traders, the market is pricing in a 64% chance that the Fed will cut interest rates by another 0.25 percentage points next month.
analyst Carsten Menke of Julius Baer Bank continues to maintain a positive view on both gold and silver, saying that "the fear of missing out on opportunities still exists in the context of fundamental factors being quite favorable for the precious metal group".
