Gold advances as dollar, yields weaken on Fed rate cut bets

Gold prices touched a nearly seven-month high on Wednesday propelled by an extended decline in the U.S. dollar and bond yields as markets grew confident that the Federal Reserve would likely cut rates by the first half of next year.

FUNDAMENTALS

* Spot gold rose 0.3% to $2,047.21 per ounce by 0236 GMT.

* U.S. gold futures for December delivery rose 0.4% to $2,047.80 per ounce.

* The dollar index slid to a more than three-month low, against its rivals, and was eyeing a nearly 4% fall for November, its worst monthly performance in a year.

* A weaker dollar makes gold less expensive for other currency holders.

* Yields on 10-year Treasury notes fell to an over two-month lows of 4.2860%.
* Fed Governor Christopher Waller – a known hawkish and influential voice at the central bank – on Tuesday flagged a possible rate cut in the months ahead, feeding market expectations that U.S. rates have peaked.
* Traders widely expect the U.S. central bank to hold rates in December, while pricing in a more than 70% chance of easing in May next year, compared to a 50% chance a day earlier, CME’s FedWatch Tool shows.

* Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion.

* Australia’s inflation eased more than expected in October as goods prices fell, a result that affirms the case for the central bank to keep interest rates unchanged next week.

* Hamas and Israel were expected to release more hostages and prisoners on the last day of a prolonged six-day truce in the Gaza Strip conflict, as attention focused on whether mediator Qatar could negotiate another extension.

* Spot silver gained 0.4% to $25.09 per ounce, platinum was steady at $939.83. Palladium rose 0.4% to $1,059.69 per ounce. DATA/EVENTS (GMT) 1000 EU Consumer Confidence Final Nov 1100 Brazil IGP-M Inflation Index Nov 1300 Germany CPI, HICP Prelim YY Nov 1330 US GDP 2nd Estimate Q3 1600 Russia Industrial Output, Unemployment Rate Oct 2300 S. Korea Retail Sales MM Oct 2350 Japan Ind.Output Prelim MM, Retail Sales YY Oct