Gold prices hit a near four-week high on Wednesday after a weaker-than-expected private employment report for December provided reassurance for some in the market the U.S. Federal Reserve may be less cautious about easing rates this year.

Spot gold rose 0.3% to $2,657.38 per ounce, as of 02:15 p.m. ET (1915 GMT) and hit its highest since Dec. 13. U.S. gold futures settled 0.3% higher at $2,672.40.

Weaker private payrolls "is contributing to gold's move, because ultimately, weaker employment numbers imply that the economy has been weaker than many had expected," said Bart Melek, head of commodity strategies at TD Securities.

The ADP National Employment report showed the U.S. economy added 122,000 jobs in the private sector last month, compared with economists' estimate of a rise of 140,000.

A separate Labor Department report showed jobless claims stood at 201,000 in the previous week, lower than estimates of 218,000.

"The bigger factor will be U.S. nonfarm payrolls on Friday, the market is expecting a change of 163 (thousand); anything significantly above that will be negative for gold," Melek said.

Traders are on edge ahead of Friday's key U.S. labor data, due at 08:30 a.m. ET, and Donald Trump's Jan. 20 inauguration, with expectations of a flurry of policy moves marking the start of his second presidency.

Minutes from the Federal Reserve's Dec. 17-18 meeting revealed officials expect inflation to ease this year but acknowledged the risk of stubborn price pressures, particularly as they assess the potential impact of Trump's policies.

Trump's proposed tariffs could stoke U.S. inflation, complicating the Fed's ability to cut rates and potentially weighing on gold prices.

However, Fed governor Christopher Waller said inflation should continue to fall in 2025 and allow the central bank to further reduce interest rates, though at an uncertain pace.

Bullion is considered an inflationary hedge, but high rates reduce the non-yielding asset's allure.

Spot silver added 0.1% to $30.03 per ounce, platinum gained 0.2% to $952.76, palladium lost 0.1% to $925.05.

Source : Reuters