Gold prices steady ahead of key economic data; Fed set to cut rates?

Investing.com-- Gold prices steadied Tuesday, holding onto recent gains as traders priced in renewed expectations that the U.S. Federal Reserve will cut interest rates in December. 

At 07:50 ET (12:50 GMT), Spot gold rose 0.3% to $4,145.57 an ounce and gold futures for February rose 0.2% to $4,180.0/oz. 

Spot gold is trading well over 50% higher year-to-date.

Gold boosted by dovish Fedspeak 

Markets have been ramping up bets on a December cut in recent sessions, especially after a number of Fed officials signaled support for easing next month. 

Markets are pricing in a 77.2% chance the Fed will cut rates by 25 basis points during its December 9-10 meeting, up sharply from a 41.8% chance seen last week, CME Fedwatch showed. 

The Wall Street Journal reported late Monday that allies of Federal Reserve Chair Jerome Powell have laid the groundwork for him to push through an interest rate cut during the central bank’s December 9-10 meeting.

But the decision is likely to be contested in an increasingly divided rate-setting committee, especially as a relative paucity of up-to-date economic indicators leave the Fed flying blind into its final meeting for the year. 

The prospect of lower rates bodes well for non-yielding assets such as gold, given that it diminishes the appeal of investing in debt. The yellow metal hit a series of record highs this year as the Fed cut rates during its past two meetings.

Haven demand for gold was also underpinned by heightened tensions between China and Japan, while concerns over stretched fiscal spending in the developed world remained in play. 

Among other metals, spot platinum fell 0.9% to $1,545.45/oz and spot silver fell 0.7% to $50.795/oz. 

Benchmark copper futures on the London Metal Exchange jumped 1.1% to $10,868.0 a tonne. 

U.S. economic data awaited for more rate cues 

Moves across metal prices were also limited by anticipation of key U.S. economic readings in the coming days. 

While the prints are for September, they will likely be the most recent data the Federal Reserve policymakers have going into the December meeting. 

Producer price inflation and retail sales prints are due later on Tuesday, while PCE price index data, the Fed’s preferred inflation gauge, is due on Wednesday.

Government officials signaled that inflation and labor prints for October will likely never be released, due to a prolonged government shutdown during the month. 

This notion had driven earlier expectations for a December rate hold by the Fed, given that the central bank will still be flying blind into its final meeting for the year. 

Ambar Warrick contributed to this article