Gold shines amid expectations of a US interest rate cut

Gold rose today, supported by a decline in the dollar, as investors’ expectations rose for a cut in US interest rates this week.

Gold rose in instant transactions by about 0.5 percent to $4,215.69 per ounce.

US gold futures for December delivery settled at $4,244.80 an ounce.

The dollar fell to hover near its lowest levels in a month, which it touched on December 4, making gold denominated in the US currency cheaper for holders of other currencies.

Tim Waterer, chief market analyst at KCM, said: “The core personal consumption expenditures data came without any changes, which makes the Federal Reserve move to cut interest rates this week, and the expectation of monetary easing conditions pushes gold higher.”

He added, “The expected cut in interest rates this week keeps the dollar under control, and at the same time gives the gold price some room to move upward.”

US consumer spending rose moderately in September after three straight months of strong growth, indicating a loss of momentum in the economy at the end of the third quarter when a weak labor market and rising costs of living dampened demand.

This came on the heels of private sector jobs data that showed the largest decline in more than two and a half years last month.

Monetary-friendly comments from a number of US central bank officials reinforced expectations of lowering interest rates.

According to the CME’s Fed Watch tool, it is 88 percent likely that the interest rate will be cut by 25 basis points at the US Central Bank meeting on December 9 and 10.

Low interest rates tend to support non-yielding assets such as gold.

Silver rose 0.1 percent at $58.35 an ounce, after rising to a record level of $59.32 on Friday. Since the beginning of the year until now, the value of the metal has more than doubled. Platinum rose 0.8 percent to $1,654.05 an ounce.

Palladium advanced 0.7 percent to $1,467.25 an ounce.