Gold prices stabilized in early Asian trading on Wednesday, in light of weak trading volume, expectations that the Federal Reserve (US Central Bank) will reduce interest rates in the first quarter of 2024, and a weak dollar in general.
The current week is likely to witness weak trading as traders around the world spend holidays until the beginning of the new year.
US data issued last week indicating a decline in inflation reinforced financial markets' expectations that the US Central Bank would cut interest rates next March. Traders now expect about an 80 percent chance of a rate cut, according to the CME Fed Watch service.
Lower interest rates would reduce the opportunity cost of holding non-yielding bullion.
The dollar index rose 0.1 percent, but remained near its lowest level in five months, on its way to its worst annual performance since 2020.
The weak dollar makes gold more attractive to holders of other currencies.
Change in prices
The price of gold in spot transactions settled at $2,066.86 per ounce, by 0150 GMT. US gold futures rose 0.4 percent to $2,078.20 per ounce.
Gold is heading to achieve gains of more than 13 percent this year (about $240 per ounce), which is the best since 2020 thanks to the trend to buy safe haven assets, a trend driven by the wars in Ukraine and the Middle East, in addition to bets on lowering US interest rates.
In terms of other precious metals, silver rose in spot transactions by 0.2 percent to $24.25 per ounce, while platinum settled at $978.56. Palladium fell 0.3 percent to $1,176.49 per ounce.
