Gold fluctuated as traders weighed the growing likelihood of a US interest rate cut against the possibility of a peace agreement in Ukraine.
The precious metal traded near $4,135 an ounce, after ending the previous session virtually unchanged. Late economic data reinforced bets that the Federal Reserve will cut interest rates at its next meeting.
A slight rise in retail sales for September showed that several months of strong spending were beginning to lose momentum, while consumer confidence this month recorded its biggest drop since April.
Hopes for an interest rate cut were boosted after White House National Economic Council Director Kevin Hassett became the frontrunner to head the Federal Reserve, especially since he shares President Donald Trump's support for lowering borrowing costs, according to a Bloomberg report.
Gold usually benefits when interest rates are low because it does not pay interest, and swap traders now see a probability of more than 80% for a quarter-point cut in December.
Interest rate expectations and the impact of geopolitical developments
Hebei Chen, an analyst at Vantage Markets in Melbourne, said the Fed's next decision has become the real Pandora's box of risk this year ( potentially triggering a chain reaction of unexpected events ), and this is likely to continue until 2026.
She added: In the absence of a strong economic link to underline expectations, any optimism remains fragile, and recent volatility in stocks and cryptocurrencies shows how quickly sentiment can change.
Gold's gains eased slightly after ABC News reported that Ukrainian officials had agreed on a plan to end the war with Russia. An end to the long-running conflict would likely reduce demand for safe-haven assets.
Gold has retreated from its peak above $4,380 an ounce last month, but has held steady above the $4,000 level.
The metal, which is on track for its best annual performance since 1979, is still up more than 55% this year, supported by central bank purchases and strong inflows from investors driven by what is known as currency devaluation trading.
Gold rose 0.1% to $4,135.73 an ounce by 8:52 a.m. Singapore time. The Bloomberg Dollar Index was steady after ending the previous session down 0.3%. Silver fell 0.2%. Platinum and palladium also declined.
