Gold gains as Fed rate-cut optimism dents dollar

[BENGALURU] Gold prices edged higher on Monday (Dec 8), as rising expectations of a US Federal Reserve interest rate cut this week pressured the US dollar.

Spot gold was up 0.3 per cent at US$4,206.99 per ounce, as at 9.18 am.

US gold futures for December delivery lost 0.2 per cent to US$4,236.30 per ounce.

The US dollar edged lower to hover near six-week lows touched on Dec 4, making greenback-priced gold cheaper for overseas buyers.

US consumer spending increased moderately in September after three straight months of solid gains, suggesting a loss of momentum in the economy at the end of the third quarter as a lacklustre labour market and rising cost of living curbed demand.

This followed private payroll data showing the sharpest decline in more than two-and-a-half years last month.

Dovish commentary from several Fed officials has further fuelled expectations of monetary easing.

CME’s FedWatch tool indicates an 88.4 per cent probability of a 25-basis-point rate cut at the Fed’s Dec 9 to 10 meeting.

Lower interest rates tend to favour non-yielding assets such as gold.

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On Thursday, data showed new US unemployment benefit claims dropped to 191,000 for the week ended Nov 29, the lowest in more than three years and well below economists’ estimate of 220,000.

Elsewhere, silver was steady at US$58.25 per ounce, platinum gained 0.3 per cent to US$1,646.56, while palladium slid 0.5 per cent to US$1,455.55. REUTERS