NEW YORK: Gold prices gained more than 1 per cent on Wednesday, with a slight US dollar pullback and wider risk-off sentiment driving demand.
Spot gold was up 0.8 per cent at US$3,963.03 per ounce at 1203 GMT. US gold futures for December delivery were up 0.3 per cent to US$3,971.90 per ounce. Gold prices have gained about 52 per cent this year, reaching an all-time peak of US$4,381.21 on October 20.
“The recent shift to more of a risk-off mood in financial markets due to growing concerns about equity market valuations is helping gold stabilise following its retreat from record levels,” said Julius Baer analyst Carsten Menke.
DOLLAR PAUSE PROVIDES SUPPORT
European shares hit a two-week low as heady equity valuations continued to make investors nervous globally.
The dollar index, meanwhile, eased 0.1 per cent after hitting a more than three-month high, making gold less expensive for other currency holders.
As the US government shutdown moves towards becoming the longest ever, investors are focusing on non-official economic reports, including the ADP National Employment Report due later on Wednesday for cues on the US interest rate path.
The US Federal Reserve cut rates last week and Chair Jerome Powell signalled it might be the last reduction in borrowing costs for the year.
Market participants now see a 72 per cent chance of a rate cut in December, down from over 90 per cent before Powell’s remarks, CME’s FedWatch Tool showed.
Non-yielding gold tends to do well in a low-interest-rate environment and during times of economic uncertainty.
“We still see sound demand from safe-haven seekers for physical gold, as is the case from emerging market central banks,” Julius Baer’s Menke said.
Elsewhere, spot silver gained 0.9 per cent to US$47.53 per ounce, platinum fell 0.3 per cent to US$1,531.69 and palladium climbed 0.5 per cent to US$1,397.93. (Reporting by Brijesh Patel in Bengaluru. Editing by Ros Russell and Mark Potter)
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