By Noel John and Pablo Sinha
(Reuters) -Gold prices climbed more than 2% on Monday to hit a two-week high as soft economic data out of the United States reinforced expectations that the Federal Reserve will cut interest rates, lifting demand for the non-yielding asset.
Spot gold climbed 2.3% to $4,090.96 per ounce as of 11:43 a.m. ET (1643 GMT) after hitting its highest level since October 27 earlier in the session. U.S. gold futures for December delivery rose 2.2% to $4,099.20 per ounce.
“Some weak data last week has the market tilting a little more dovish in their Fed expectations. … We could very much still see a December rate cut,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Data last week showed the U.S. economy shed jobs in October, with losses in the government and retail sectors. Additionally, U.S. consumer sentiment slumped in early November as households worried about the economic fallout, data on Friday showed.
Markets now see a 67% chance of a rate cut in December, with odds climbing to about 80% by January, according to CME Group’s FedWatch tool. [FEDWATCH]
Non-yielding gold tends to do well in a low-interest-rate environment and during times of economic uncertainty.
Gold could range between $4,200 and $4,300/oz by the end of the year, with $5,000/oz still a reasonable objective for the first quarter of next year, Grant added.
Meanwhile, the U.S. Senate on Sunday moved forward on a measure aimed at reopening the federal government and ending a now 40-day shutdown.
“A reopening would restore data flow and revive expectations for a December rate cut, but more importantly it shifts market focus back to the deteriorating U.S. fiscal outlook,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.
Elsewhere, spot silver rose 3.6% to $50.03 per ounce, reaching its highest since October 21, platinum rose 1.5% to $1,568.41 and palladium added 2.2% to $1,411.33.
(Reporting by Noel John and Pablo Sinha in Bengaluru; Editing by Will Dunham)
