Gold prices hit a nearly two-week high on Wednesday, after weaker US economic data was expected to reinforce expectations that the US Federal Reserve (FED) will cut interest rates in December, while putting pressure on the USD.
At 6:15 a.m. GMT, spot gold rose 0.7% to $4,156.89/ounce, the highest level since November 14.
December gold futures on Comex increased by 0.4%, to $4,154.10/ounce.
markets are now leaning more toward the possibility of a Fed rate cut in December. This view is reinforced by a series of puppet speeches from Fed officials and dovish economic data factors that are supporting gold prices from a yield perspective, said Mr. Tim Waterer, chief market expert at KCM Trade.
On Wall Street, the Dow Jones index increased by 1.4%, the S&P 500 increased by 0.9% and Nasdaq composite increased by 0.67% in the third session, marking a series of three consecutive increases in US stocks.
figures released on the same day showed US retail sales in September increased lower than expected, while the Producer Price Index (PPI) increased 2.7% over the same period last year equal to the increase in August.
The data comes shortly after a series of dovish comments from Fed officials, further reinforcing expectations that the US central bank could soon shift policy.
The USD fell to a one-week low, as investors bet that Kevin Hassett, who is seen as a leading candidate for the position of Fed Chairman, could pursue a thinner policy, making USD-denominated gold more attractive to foreign investors.
The yield on the 10-year US Treasury note remained near a one-month low, while US Treasury Secretary Scott Bessent said the Fed's interest rate management system was struggling and needed to be simplified.
According to CME FedWatch tool, the market is currently pricing in an 85% chance that the Fed will cut interest rates in December, a sharp increase compared to 50% last week.
Gold an unyielding asset often benefits in a low-yielding environment.
The US weekly jobless claims report is expected to be released later on Wednesday.
In other precious metals, spot silver rose 0.9% to $51.85 an ounce, platinum fell slightly by 0.1% to $1,552.50 an ounce, while palladium moved sideways around $1,396.80 an ounce.
Meanwhile, China's net gold imports through Hong Kong in October fell about 64% compared to the previous month, reflecting weaker demand in the world's largest gold consumer market.
