Gold prices climbed in Asian trading on Wednesday as concerns over rising fiscal spending in major developed economies, particularly Japan, pushed investors toward safe-haven assets.
Uncertainty surrounding a potential December interest rate cut by the U.S. Federal Reserve also supported gold. Signs of weakness in the U.S. labor market and anticipation ahead of the Fed’s October meeting minutes added to the demand for havens.
The dollar steadied after recent gains, helping lift precious metals. Gold also benefited from traders seeking protection during a broad global stock market selloff, as investors grew cautious about stretched technology valuations.
Upcoming earnings from NVIDIA Corporation (NASDAQ: NVDA) are expected to provide further signals for market sentiment.
Spot gold rose 0.6% to $4,092.51 an ounce, while December gold futures gained 0.7% to $4,093.79 an ounce by 00:54 ET (05:54 GMT).
Haven demand grows as fiscal risks increase
A sharp rise in Japanese government bond yields, led by longer-dated maturities, intensified worries over Japan’s expanding fiscal burden and the government’s capacity to finance new spending.
Markets were unsettled by reports that Prime Minister Sanae Takaichi plans to launch a larger-than-expected stimulus package worth 25 trillion yen ($163 billion).
Yields on 20-year and 30-year Japanese bonds surged to multi-decade highs, while the 10-year benchmark reached its strongest level since the 2008 financial crisis.
Japan, a major global creditor, poses a risk to international markets if instability in its bond market grows—especially as investor appetite for Japanese bonds weakens.
Tensions also rose on the geopolitical front. A diplomatic dispute with China escalated this week after remarks by Takaichi on Taiwan, despite efforts from Tokyo to ease friction.
Other precious metals saw strong gains as well. Spot platinum increased 0.9% to $1,547.96 an ounce, while spot silver rose 1.3% to $51.3825 an ounce.
Fed rate outlook and meeting minutes in focus
Expectations for the Federal Reserve’s December decision also supported gold. Recent jobless claims data continued to show softness in the labor market, prompting traders to slightly increase bets on a December rate cut. Still, overall market sentiment leans toward the Fed keeping rates unchanged.
According to CME FedWatch, traders now price in a 42.4% chance of a 25 basis point cut at the December 10–11 meeting, down from 62.4% a week earlier.
Attention on Wednesday will turn to the minutes from the Fed’s late-October meeting for further policy clues. While most members supported a 25 bps cut at that time, policymakers have appeared more divided on whether to cut again in December.
The ongoing U.S. government shutdown has restricted access to key economic data, leaving the Fed with limited information ahead of the meeting and increasing the likelihood of a cautious hold.
Stable U.S. interest rates typically reduce the appeal of non-yielding assets such as gold.
