Gold prices hit a nearly three-week high on Tuesday (November 11), boosted by expectations that a potential end to the US government shutdown and a restart of economic data could pave the way for the Federal Reserve to cut interest rates next month.
Spot gold prices rose 0.3% to $4,126.77 an ounce at 3:13 p.m. ET (2013 GMT), after earlier hitting their highest level since October 23. US gold futures for December delivery fell 0.1% to $4,116.30 an ounce.
Gold, traditionally considered a safe-haven asset, also tends to benefit in a low-interest-rate environment because it is a non-yielding asset. "Traders believe (the data) will show some weak economic numbers and that will encourage the Fed to cut rates in December... that's probably driving positive sentiment in the gold and silver markets today," said Jim Wyckoff, senior analyst at Kitco Metals.
The US Senate on Monday approved a compromise that would end the longest government shutdown on record. The shutdown has triggered a data blackout, depriving policymakers and markets of key indicators related to employment and inflation.
The central bank cut interest rates at its last meeting, but Chairman Jerome Powell emphasized that another rate cut this year is far from certain. Markets see a 64% chance of a December rate cut, according to the CME's FedWatch Tool.
Data last week showed the US economy lost jobs in October, while consumer sentiment sank to a three-and-a-half-year low in early November.
Meanwhile, Fed Governor Stephen Miran suggested on Monday that a 50 basis point cut might be appropriate for December, given the weakening labor market and declining inflation.
Gold demand this year and next is expected to reach its strongest level since 2011, UBS said in a note. "Any significant increase in political and financial market risk could push gold towards our upside target of USD 4,700/oz," they added.
Elsewhere, spot silver rose 1.2% to $51.12 per ounce, its highest level since October 21. Platinum rose 0.4% to $1,583.72, and palladium gained 2% to $1,442.75. (alg)
Source: Reuters
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