Gold prices rose in Asian trading on Tuesday, extending sharp overnight gains as traders priced in renewed expectations that the U.S. Federal Reserve would cut interest rates in December.
Caution ahead of a series of key US economic data releases also boosted demand for safe havens, with gold rising even as the dollar remained strong. Broader metal prices also advanced.
Spot gold rose 0.3% to $4,145.57 an ounce, while February gold futures rose 0.2% to $4,180.0 an ounce by 04:46 Saudi time.
Bets on an interest rate cut in December rise after dovish comments from the Fed
It was noted that markets have been increasing their bets on an interest rate cut in December during recent sessions, especially after two Federal Reserve officials indicated their support for easing next month.
Markets are pricing in a 77.2% probability that the Fed will cut interest rates by 25 basis points at its December 9-10 meeting, a sharp rise from the 41.8% recorded last week, according to the CME Fedwatch index.
The prospect of lower interest rates bodes well for non-yielding assets like gold, as it reduces the attractiveness of investing in debt. The precious metal has reached a series of record highs this year following the Federal Reserve's interest rate cuts at its last two meetings.
Demand for gold as a safe haven was also boosted by escalating tensions between China and Japan, while concerns about excessive fiscal spending in the developed world persisted.
Among other metals, spot platinum rose 0.5% to $1,570.65 an ounce, while spot silver rose 0.8% to $51.5555 an ounce.
Benchmark copper contracts on the London Metal Exchange jumped 1.2% to $10,887.0 per ton.
