Gold prices rose on Monday (December 8), boosted by rising expectations of a US interest rate cut, which weighed on the dollar, ahead of this week's Federal Reserve policy meeting.

Spot gold rose 0.3% to $4,209.43 per ounce at 08:51 GMT. US gold futures for December delivery fell 0.1% to $4,239.40 per ounce. The dollar index weakened slightly, nearing a one-month low reached on December 4, making dollar-priced gold more affordable for overseas buyers.

"Gold is benefiting from a weaker US dollar and market participants expecting the Fed to cut interest rates this week," said UBS analyst Giovanni Staunovo.

Data last week showed that US consumer spending grew moderately in September. This reflects slowing economic momentum amid rising costs and a weakening labor market, as private payrolls saw their sharpest decline in more than two and a half years in November.

According to the CME's FedWatch tool, the market is pricing in an 87% probability of a 25 basis point interest rate cut at the Fed's December 9-10 policy meeting, following the release of weak economic data and dovish statements from several Fed officials.

Lower interest rates typically boost demand for non-yielding assets like gold. "We still expect further rate cuts next year, which would push gold to $4,500/oz next year," Staunovo added.

Silver rose 0.3% to $58.43 per oz, after hitting a record high of $59.32 on Friday. "Silver is benefiting from the same factors as gold. In addition, expectations of increased industrial demand as a result of monetary and fiscal stimulus have helped silver outperform gold in recent weeks," Staunovo said.

The price of this white metal has doubled this year, driven by supply deficits and its designation as an essential mineral by the US.

Elsewhere, platinum rose 0.6% to $1,650.90 and palladium gained 1% to $1,471.26. (alg)

Source: Reuters.com