Gold prices surged nearly 3% on Monday (November 10), hitting their highest level in more than two weeks, as weak U.S. economic data reinforced expectations that the Federal Reserve would cut interest rates, boosting demand for the non-yielding asset.
Spot gold rose 2.8% to $4,111.39 an ounce at 2:21 PM ET (19:21 GMT) after hitting its highest level since October 24 earlier in the session. U.S. gold futures for December delivery rose 2.8% to close at $4,122.00 an ounce.
"Some of the weak data last week made the market a little more dovish in their expectations for the Fed... We could still see a rate cut in December," said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Data last week showed the U.S. economy lost jobs in October, with losses in the government and retail sectors. Additionally, US consumer sentiment declined in early November due to household concerns about the economic impact, data released Friday showed.
The market now sees a 64% chance of a rate cut in December, with the chance increasing to around 77% in January, according to the CME Group's FedWatch tool.
Non-yielding gold tends to perform well in low-interest-rate environments and during times of economic uncertainty. Gold prices could range between $4,200 and $4,300 per ounce by year-end, with $5,000/ounce still a reasonable target for the first quarter of next year, Grant added.
Meanwhile, the US Senate on Sunday advanced a measure aimed at reopening the federal government and ending the 40-day shutdown.
"The reopening of economic activity will restore data flow and revive expectations of a December rate cut, but more importantly, it will shift market focus back to the deteriorating US fiscal outlook," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.
Elsewhere, spot silver rose 4.5% to $50.46 an ounce, reaching its highest level since October 21, platinum rose 2.4% to $1,582.50, and palladium rose 3.1% to $1,422.79. (alg)
Source: Reuters.com
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