Gold prices rose during Asian trading on Wednesday, supported by a weaker U.S. dollar as a series of softer American economic indicators strengthened expectations of a Federal Reserve rate cut in December.
Safe-haven demand for gold also held firm even as risk-driven assets rallied this week. Ongoing tensions between Japan and China, uncertainty around a potential Russia-Ukraine ceasefire, and concerns over heavy government spending added to the metal’s appeal.
Spot gold increased 0.9% to $4,166.13 an ounce, while February gold futures climbed 0.9% to $4,201.15 an ounce by 00:24 ET (05:24 GMT).
Gold Rises as Weak U.S. Data Fuels Rate-Cut Expectations
Gold prices strengthened on Tuesday and Wednesday after several September economic indicators pointed toward further monetary easing by the Federal Reserve.
Retail sales showed only marginal growth, while core producer inflation fell more than expected—both signs of continued cooling in the U.S. economy.
These September figures will be among the last economic updates available to the Fed before its December meeting. The prolonged U.S. government shutdown is expected to delay labor and inflation data for October indefinitely.
The PCE price index, the Fed’s preferred inflation measure, has been rescheduled for release on December 5 by the Commerce Department’s Bureau of Economic Analysis.
Expectations for a December rate cut increased considerably over the past week, especially after two Fed officials signaled support for near-term easing. According to the CME FedWatch tool, markets now price in an 80.7% chance of a 25-basis-point cut at the December 9–10 meeting, up sharply from 42.4% the week before.
Other precious metals also advanced. Spot silver rose 1% to $52.0215 an ounce, nearing a record level, while spot platinum added 0.2% to $1,559.90 an ounce.
Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.3% to $10,992.90 per tonne, supported by Chilean producer Codelco announcing substantial price increases for its Chinese customers.
Lower interest rates typically benefit non-yielding assets like gold and commodities because they reduce the appeal of interest-bearing assets such as Treasuries.
Dollar Weakness Boosts Gold and Metals
Gold and broader metal prices also gained from a weaker dollar, which pulled back from recent highs on expectations of lower U.S. interest rates.
A softer dollar usually supports dollar-denominated commodities by making them more affordable for international buyers.
The dollar index, which tracks the U.S. currency against major global peers, fell 0.5% from a near six-month peak seen last week.
