Gold prices rose 2% on Wednesday (November 12) as US Treasury yields weakened ahead of the House vote on reopening the government, a move that could revive economic data releases and strengthen expectations of a Federal Reserve interest rate cut in December.
Spot gold prices rose 2% to $4,208.98 an ounce, their highest level since October 21, as of 1:46 PM ET (6:46 PM GMT). US gold futures for December delivery closed 2.4% higher at $4,213.60 an ounce.
The benchmark US 10-year yield fell 1% to its lowest level since November 5. "The US government is starting to reopen, and the market is anticipating the release of economic data, which will likely show that the American economy has weakened," said Bart Melek, head of commodity strategies at TD Securities, adding that traders may increase long positions and close some short ones.
The Republican-controlled House of Representatives will vote today on a deal to end the longest government shutdown in US history. The 42-day shutdown has weighed on the economy and halted government data, prompting policymakers and markets to rely on private indicators to gauge economic health.
Spot silver prices rose 4.6% to $53.58 an ounce, their highest level since October 17. "Right now, there's a lot of concern, especially in silver, that inventories are very low. What you're seeing right now in gold is a spillover from silver this morning," said Bob Haberkorn, market strategist at RJO Futures.
Meanwhile, ADP's weekly employment data on Tuesday showed private companies lost an average of 11,250 jobs per week in the four weeks ending October 25, signaling continued weakness in the labor market.
Traders now see a 65% probability of a 25 basis point interest rate cut at the Fed's December meeting, according to the CME Group's FedWatch tool.
Non-yielding gold tends to perform well in low-interest rates and during times of economic uncertainty. Elsewhere, platinum rose 2% to $1,616.80 and palladium rose 2.5% to $1,480.58. (alg)
Source: Reuters
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