Gold prices increase sharply, markets bet the FED will cut interest rates in December

World gold prices rose to a more than three-week high on Thursday, supported by expectations that the release of economic data after the US government reopens could strengthen the possibility of the Federal Reserve cutting interest rates next month.

Spot gold prices increased by 0.2% to 4,206.64 USD/ounce at 11:03 am EST (equivalent to 23:03 on November 13, Vietnam time). Meanwhile, December gold futures in the US fell 0.1% to $4,211.5 an ounce.

Traders expect economic data released after ending the government shutdown to show a weakening US labor market, thereby prompting the Fed to make at least one interest rate cut at its December meeting, according to Jim Wyckoff - senior analyst at Kitco Metals.

Private surveys have recorded signs of weakness in the job market.

The US government will resume operations after 43 record closures, according to the budget allocation agreement for federal operations until January 30.

Although the Fed cut interest rates last month, Chairman Jerome Powell warned that further easing this year is not a certain thing, partly due to a lack of economic data.

A Reuters survey shows that 80% of economists expect the Fed to continue cutting 25 basis points at its meeting on December 9-10.

Low interest rates are often beneficial for gold - a non-yielding asset - and this precious metal is also considered a safe haven during times of economic uncertainty.

Standard Chartered said in a note that gold's correlation with key macro factors such as the US dollar and real yields has weakened significantly in the past two weeks, reflecting a shift to structural factors such as currency depreciation risks and concerns about US public debt.

In other precious metals, spot silver fell 1.1% to $22.83/ounce after hitting its highest level since October 17 in the session.

If silver does not make a clear breakthrough, we could see another profit-taking - expected to maintain high volatility in the short term, said Tai Wong, an independent metals trader.

platinum prices fell 1.9% to $1,585.10, while palladium fell 1.2% to $1,456.5.