Gold prices rose more than 1% on Wednesday (November 5), with a slight weakening of the US dollar and widespread risk-off sentiment boosting demand.

Spot gold rose 0.8% to $3,966.54 per ounce as of 10:44 GMT. US gold futures for December delivery rose 0.4% to $3,976.10 per ounce. Gold prices have risen about 52% this year, hitting an all-time high of $4,381.21 on October 20.

"The recent shift to risk-off sentiment in financial markets due to rising concerns about equity market valuations helped gold stabilize after falling from record levels," said Julius Baer analyst Carsten Menke.

European stocks hit a two-week low as equity valuations continued to unsettle global investors. Meanwhile, the dollar index weakened 0.1% after hitting its highest level in more than three months, making gold cheaper for holders of other currencies.

As the US government shutdown nears its longest on record, investors are focusing on non-official economic reports, including the ADP National Employment Report due later Wednesday, for clues on the direction of US interest rates. The US Federal Reserve cut interest rates last week, and Chairman Jerome Powell has hinted that it may be the last cut in borrowing costs this year.

Market participants now see a 72% chance of a rate cut in December, down from more than 90% before Powell's statement, according to the CME FedWatch Tool.

Non-yielding gold tends to perform well in low-interest-rate environments and during times of economic uncertainty. "We continue to see strong demand from safe-haven investors for physical gold, as well as from emerging market central banks," said Julius Baer's Menke.

Elsewhere, spot silver rose 1.3% to $47.69 an ounce, platinum fell 0.1% to $1,533.91, and palladium rose 0.4% to $1,397.46.(alg)

Source: Reuters