By Noel John
(Reuters) -Gold prices fell to their lowest levels in more than a week on Tuesday as fading bets on a Federal Reserve interest rate cut next month dented demand ahead of delayed U.S. economic data releases this week.
Spot gold was down 0.1% at $4,041.54 per ounce, as of 1027 GMT, after hitting its lowest since November 10 earlier in the session.
U.S. gold futures for December delivery fell 0.8% to $4,040.30 per ounce.
“Market participants are pricing out U.S. interest rate cuts following more hawkish comments from Fed officials,” said UBS analyst Giovanni Staunovo.
“I would expect gold prices to bottom out soon, as I still see the Fed cutting rates several times over the coming quarters, and central banks’ diversification into gold remains strong.”
Markets have trimmed their bets for a rate cut next month to just over a 46% chance, down from 67% last week, the CME FedWatch tool showed. [FEDWATCH]
The longest U.S. government shutdown, which ended last week, led to a halt of official economic data, leaving policymakers and traders flying blind ahead of next month’s Fed policy meeting.
Traders had hoped the resumption of official data would make the case for a December rate cut, but those hopes faded as more Fed officials last week signalled caution.
Fed Vice Chair Philip Jefferson said on Monday that the central bank needed to “proceed slowly” on further rate cuts.
Non-yielding gold tends to do well in a low-interest-rate environment and during times of economic uncertainties.
Investors will be looking to Wednesday’s release of minutes from the Fed’s last meeting and September non-farm payrolls due on Thursday for further cues.
“We still see a longer-term favourable fundamental backdrop for gold. The U.S. economy continues to cool, U.S. interest rates are set to fall and the U.S. dollar should weaken as a result,” said Julius Baer analyst Carsten Menke.
Elsewhere, spot silver was up 0.4% at $50.38 per ounce, platinum rose 0.3% at $1,537.55, and palladium gained 0.6% to $1,400.69.
(Reporting by Noel John in Bengaluru; Editing by Alexander Smith and Emelia Sithole-Matarise)
