Gold prices turn to decline after reaching a 3-week peak

Gold prices fell slightly in the trading session on Wednesday, under pressure from the recovery of the USD and profit-taking activities after the precious metal climbed to a nearly three-week high in the previous session, thanks to expectations that the US Federal Reserve (FED) will cut interest rates next month.

Spot gold prices fell 0.5% to $4,107.41/ounce at 4:21 GMT, after hitting a high since October 23 in the third session. US gold futures for December delivery also fell slightly by 0.1%, to $4,113.8/ounce.

The recent weakening of the US dollar has supported gold and silver well, both of which have recorded gains this week, said Tim Waterer, chief market analyst at KCM Trade. It seems that "regular order" has returned to gold, as the precious metal holds steady above $4,100 and is heading for higher levels, if US economic data continues to support the possibility of monetary policy easing."

USD Index (.DXY) rose 0.1% against other major currencies, ending a streak of five consecutive sessions of decline, making gold less attractive to investors holding other currencies.

The US Senate approved a federal budget restoration deal on Monday, following a record-long closure that left millions without food subsidies, hundreds of thousands of federal employees unpaid, disrupted air transportation and delayed release of economic data.

According to CME Group's FedWatch tool, investors are currently pricing in a 68% chance that the Fed will cut interest rates by another 25 basis points next month, up from 64% in the previous session.

Gold - a non-interest-bearing asset often benefits in a low interest rate environment and when the global economy is unstable.

Fed Governor Stephen Miran said on Monday that a 50 basis point cut would be reasonable for the December session, as inflation is cooling while the unemployment rate continues to rise.

SPDR Gold Trust, the world's largest gold ETF, said its gold holdings rose 0.41% to 1,046.36 tonnes on Tuesday, up from 1,042.06 tonnes on Monday.

For other precious metals, spot silver fell 0.4% to $51.05 an ounce, platinum fell 0.4% to $1,578.95 an ounce, while gold lost nearly 1%, to $1,431.47 an ounce.