Gold prices pushed higher in Asian trading on Wednesday, lifted by a weakening U.S. dollar after a run of underwhelming U.S. economic reports added momentum to bets that the Federal Reserve will lower interest rates in December.
Investor appetite for safe-haven assets remained firm even as risk markets extended their rally this week. Ongoing strains between Japan and China, uncertainty surrounding a potential Russia-Ukraine ceasefire, and concerns over elevated government spending all contributed to support for bullion.
Spot gold rose 0.9% to $4,166.13 an ounce, while February gold futures gained 0.9% to $4,201.15/oz as of 00:24 ET (05:24 GMT).
Gold advances as weak U.S. data bolsters policy easing expectations
Bullion jumped sharply on Tuesday and Wednesday after September’s economic indicators reinforced the narrative that the Fed may be preparing to ease policy again.
Retail sales showed barely any growth, and core producer prices fell more than anticipated, pointing to ongoing cooling in economic activity. With the government shutdown having stalled the release of October labor and inflation numbers, these September data points are among the few official figures the Fed will have before its December meeting.
The Commerce Department’s Bureau of Economic Analysis rescheduled the PCE price index—the Fed’s preferred inflation gauge—for release on December 5.
Rate-cut expectations have climbed steeply over the past week, accelerated by public remarks from two Fed policymakers who backed the idea of near-term easing. According to CME’s FedWatch tool, markets now assign an 80.7% probability of a 25-basis-point cut at the December 9–10 meeting, up from 42.4% just one week earlier.
Other precious metals tracked gold higher. Spot silver gained 1% to $52.0215/oz, hovering close to record levels, while spot platinum rose 0.2% to $1,559.90/oz. Industrial metals also strengthened, with benchmark copper on the London Metal Exchange rising 0.3% to $10,992.90 a tonne after Chilean producer Codelco signaled sharp price increases for Chinese buyers.
Lower interest rates typically boost non-yielding assets like gold by reducing the relative attractiveness of interest-bearing securities such as Treasuries.
Dollar softness lends additional support to metals
Gold and other metals also benefited from renewed weakness in the U.S. dollar, which pulled back from last week’s multi-month highs on growing expectations of lower rates.
A softer dollar generally boosts dollar-denominated commodities, making them more affordable for overseas buyers. The dollar index, which tracks the currency against a basket of major peers, slipped 0.5% after touching a near six-month high last week.