By Pablo Sinha
(Reuters) -Gold prices held steady on Tuesday as softer-than-expected U.S. retail sales data reinforced traders’ expectations that the Federal Reserve will trim interest rates in December.
Spot gold <XAU=> was flat at $4,139.79 per ounce by 01:54 p.m. ET (1854 GMT). The price earlier in the day hit its highest level since November 14, and rose nearly 2% on Monday after some U.S. central bank policymakers signaled support for a third rate cut this year at their December 9-10 meeting.
U.S. gold futures <GCcv1> for December delivery settled 1.1% higher at $4,140 per ounce.
“There’s revived hope for a December rate cut based on recent dovish Fed speak, and this (data) doesn’t seem to be changing that,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
U.S. retail sales increased less than expected in September, taking a breather following a recent stretch of strong gains, while the Producer Price Index increased 2.7% in the 12 months through September, matching the advance in August.
Markets are pricing in an 85% chance of a Fed rate cut next month – compared to 50% last week – and a 65% probability of another reduction in borrowing costs in January, CME Group data showed.
Fed Governor Stephen Miran said on Tuesday a deteriorating job market calls for further rate cuts, echoing dovish remarks from Fed Governor Christopher Waller on Monday.
Non-yielding gold tends to do well in an environment of low interest rates, and during geopolitical and economic instability.
“The underlying conditions of ongoing economic uncertainty, geopolitical turbulence and dovish Fed expectations continue to support gold prices (in the near term),” ActivTrades analyst Ricardo Evangelista said.
Spot silver <XAG=> fell 0.3% to $51.21 per ounce, platinum <XPT=> rose 0.2% to $1,546.42 and palladium <XPD=> gained 0.1% to $1,397.49.
(Reporting by Pablo Sinha in Bengaluru; Additional reporting by Sherin Elizabeth Varghese and Sarah Qureshi; Editing by Louise Heavens, Vijay Kishore and Paul Simao)
