Gold holds steady as rising US rate-cut bets offset dollar strength

Gold prices held steady on Tuesday (Nov 25) after rising nearly 2 per cent in the previous session, as increasing prospects of a US rate cut in December countered a firm US dollar.

Spot gold was down 0.2 per cent at US$4,132.20 per ounce, as at 9.07 am. Bullion rose 1.8 per cent on Monday to US$4,139.80, its highest since Nov 14.

US gold futures for December delivery edged 0.7 per cent higher to US$4,049.50 per ounce.

The US dollar held firm near six-month highs hit last week, making greenback-priced gold more expensive for other currency holders.

New York Federal Reserve president John Williams said on Friday that US interest rates could fall “in the near term” without putting the Fed’s inflation goal at risk, while helping guard against a slide in the job market.

Investors are now pricing in an 81 per cent chance of a Fed rate cut in December, up from 79 per cent a day earlier and 40 per cent last week, as per the CME FedWatch Tool.

Non-yielding gold tends to do well in low-interest-rate environments.

Other Fed members have, however, maintained a hawkish stance. Dallas Fed president Lorie Logan called for leaving the policy rate on hold, while Fed presidents for Chicago and Cleveland warned that cutting rates further right now carries a wide range of risks for the economy.

Investor focus this week is on key economic data delayed by the government shutdown, including US retail sales, jobless claims and producer price figures, for more clarity on the Fed’s rate-cut path.

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On the geopolitical front, US and Ukrainian officials sought to narrow the gaps between them on Monday over a plan to end the war in Ukraine, after agreeing to modify a US proposal that Kyiv and its European allies saw as a Kremlin wish list.

Elsewhere, spot silver slipped 0.3 per cent to US$51.24 per ounce, platinum rose 0.4 per cent to US$1,550.10, and palladium lost 0.1 per cent to US$1,393.66. REUTERS

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