Gold held steady, halting a two-day rally, as investors tempered expectations of a Federal Reserve interest rate cut next month.

Gold bullion traded near $4,070 an ounce, after rising nearly 1% over the previous two sessions. The US will not release its October employment report, leaving Fed policymakers without significant data before their final meeting of the year. Meanwhile, minutes from the October meeting showed many officials said it would likely be appropriate to keep interest rates steady for the remainder of 2025.

Gold bullion tends to benefit from lower interest rates because it doesn't pay interest, so if the Fed keeps rates unchanged, it could reduce the commodity's appeal. Furthermore, the US dollar rose to its highest level since late September on Wednesday, which also acted as a drag as it made the metal more expensive for most buyers.

Gold has rallied sharply this year, rising more than 50% and hitting a record in October, before recovering. The rally was supported by the Fed's two previous interest rate cuts, as well as increased central bank buying and inflows into bullion-backed exchange-traded funds (ETFs).

Gold prices pared gains after meeting minutes revealed a divided Fed, which cut borrowing costs last month despite concerns that easing too quickly could hamper inflation progress, said Manav Modi, an analyst at Motilal Oswal Financial Services Ltd. Uncertainty increased when the October employment report was canceled, Modi added.

Expectations for a rate cut at the December meeting have dropped sharply. Swap contracts tied to the Fed's policy rate now imply a cut chance of about one in four. Before Wednesday, the odds were closer to 50-50.

Later, investors will assess the September payrolls report, due at 8:30 a.m. New York time after a delay caused by the government shutdown.

Gold fell 0.1% to $4,072.12 an ounce at 12:11 p.m. in London. The Bloomberg Dollar Spot Index strengthened slightly, after rising 0.5% on Wednesday. Silver fell below $51 an ounce, platinum was little changed, and palladium gained. (alg)

Source: Bloomberg