Gold prices advanced in Asian trading on Wednesday, supported by renewed demand for defensive assets as investors grew increasingly uneasy about fiscal pressures in major developed economies, particularly Japan.
Questions over whether the Federal Reserve will move ahead with a December rate cut — as mixed labor market signals emerge and markets await the minutes from the Fed’s October meeting — also helped lift gold alongside other havens.
The dollar held steady after a recent upswing, offering additional support to metals. A broad slide in global equities, driven by worries about overstretched technology valuations, further encouraged investors to rotate into gold. Traders are now watching results from NVIDIA Corporation (NASDAQ:NVDA), which could influence overall risk sentiment.
By 00:54 ET (05:54 GMT), spot gold was up 0.6% at $4,092.51 an ounce, while December gold futures gained 0.7% to $4,093.79.
Haven flows strengthen as Japan’s fiscal outlook draws scrutiny
A sharp rise in Japanese government bond yields — especially at the long end — has stirred fears that the country’s already heavy spending plans are becoming more difficult to finance. Concerns intensified following reports that Prime Minister Sanae Takaichi is preparing a stimulus package far larger than anticipated, worth around 25 trillion yen ($163 billion).
Yields on 20- and 30-year Japanese bonds climbed to levels not seen in decades, while the benchmark 10-year yield touched its highest point since the 2008 global financial crisis.
Because Japan is one of the world’s largest creditor nations, instability in its debt market — particularly as foreign demand wanes — risks spilling into broader global markets.
Geopolitical tension also played a role, with a diplomatic dispute between Japan and China escalating this week after remarks from Takaichi regarding Taiwan, despite efforts by Tokyo to de-escalate the situation.
Other precious metals joined the rally: spot platinum rose 0.9% to $1,547.96, and spot silver jumped 1.3% to $51.3825.
Fed doubts linger as markets look to meeting minutes
Uncertainty about the Federal Reserve’s next move continued to underpin gold after recent jobless claims suggested persistent softness in the U.S. labor market.
While traders slightly increased bets on a December rate cut, markets overall remain tilted toward the expectation of a pause. According to the CME FedWatch Tool, the probability of a 25-basis-point cut at the December 10–11 meeting sits at 42.4%, sharply lower than the 62.4% odds seen last week.
Investors are now focused on the upcoming release of the Fed’s October minutes. Although policymakers overwhelmingly backed a 25-bp reduction last month, divisions have grown over whether another cut is warranted in December.
The prolonged U.S. government shutdown has also left the Fed with limited new economic data, increasing the chances that officials take a more cautious approach at their final meeting of the year.
Stable interest rates typically diminish the appeal of non-yielding assets like gold — but with economic uncertainty rising, safe-haven demand remains firmly in place.
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