By Anmol Choubey
(Reuters) -Gold prices hit their highest levels in nearly three weeks on Tuesday, supported by expectations a potential U.S. government reopening could restart the flow of U.S. economic data ahead of an expected Federal Reserve rate cut next month.
Spot gold was up 0.6% at $4,140.60 per ounce at 1227 GMT, having earlier hit its highest since October 23 at $4,148.75, still below its peak of $4,381.21 on October 20.
U.S. gold futures for December delivery rose 0.6% to $4,147.20 per ounce.
The latest rally in gold, traditionally a hedge against uncertainty, has come alongside improving risk appetite driven by hopes of a U.S. government shutdown deal, as traders bet that resumed economic data could strengthen the Federal Reserve’s case for further rate cuts.
“A reopening would restart the economic data flow, potentially firming expectations for a December rate cut,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Traders are pricing in a 64% probability of a quarter-point rate cut next month. [USDIRPR/]
“A renewed focus on U.S. fiscal concerns, as a government reopening would enable fresh spending financed through additional borrowing,” is also supportive for gold, Hansen added.
Gold, a non-yielding asset, tends to do well in low-interest rate environments.
Fed policymakers remain divided on the path of monetary policy, complicating Chair Jerome Powell’s efforts to navigate differing views following two rate cuts earlier this year.
Fed Governor Stephen Miran on Monday suggested that a 50 basis-point cut might be appropriate for December.
Meanwhile data last week highlighted economic stress, with the U.S. shedding jobs in October and consumer sentiment declining to a 3-1/2-year low as of early November.
Julius Baer analyst Carsten Menke reiterated a constructive outlook for both gold and silver, adding that “the fear of missing out still seems present” amid a favorable fundamental backdrop for the metals.
Elsewhere, spot silver gained 1.3% to $51.20 per ounce, platinum rose 0.9% to $1,592.28 and palladium climbed 1.8% to $1,440.95.
(Reporting by Anmol Choubey in Bengaluru; Editing by Jan Harvey, Alexander Smith and Shailesh Kuber)
