Gold prices moved higher during Wednesday’s Asian session, supported by a retreating U.S. dollar as another round of soft U.S. economic figures boosted confidence that the Federal Reserve is preparing to lower interest rates in December.
Demand for safe-haven assets remained firm despite continued strength in risk markets. Persistent diplomatic strains between Japan and China, uncertainty surrounding efforts to negotiate a Russia-Ukraine ceasefire, and worries over expanding fiscal deficits all added to the appeal of bullion.
Spot gold climbed 0.9% to $4,166.13 per ounce, while February futures posted a matching 0.9% gain to $4,201.15 per ounce as of 00:24 ET (05:24 GMT).
Weak U.S. data lifts gold as traders increase bets on Fed easing
Gold extended its recent rally after Tuesday’s and Wednesday’s economic releases signaled ongoing cooling within the U.S. economy, giving the Fed more room to cut rates.
Retail sales for September barely advanced, and core producer prices contracted more sharply than anticipated—both indications that momentum continues to slow. With the government shutdown pushing back the publication of October’s labor and inflation data, the September numbers are among the final data sets available to the Fed ahead of the December policy meeting.
The Commerce Department’s Bureau of Economic Analysis has delayed the release of the PCE price index—widely known as the Fed’s key inflation measure—until December 5.
Market expectations for a December cut have accelerated rapidly in recent days, especially after two Fed officials made comments supportive of near-term policy easing. According to the CME FedWatch tool, traders now assign an 80.7% probability of a 25-basis-point cut, compared with just 42.4% a week earlier.
Other precious metals followed suit: spot silver added 1% to $52.0215 per ounce, nearing record territory, while spot platinum rose 0.2% to $1,559.90 per ounce. Industrial metals strengthened as well—benchmark copper prices on the London Metal Exchange edged up 0.3% to $10,992.90 per tonne following news that Chilean miner Codelco plans significant price hikes for its Chinese customers.
Lower interest rates typically benefit assets like gold and commodities that do not generate yield, making them more attractive relative to bonds and other rate-sensitive instruments.
Dollar pullback adds another tailwind for metals
Metals also found support in the weakening U.S. dollar, which slipped from the multi-month highs reached last week on expectations of coming monetary easing.
A softer dollar tends to lift commodities priced in dollars by improving affordability for non-U.S. buyers. The dollar index eased 0.5% after touching its highest level in nearly six months.
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