Gold drifts higher on US rate cut expectations

Gold prices nudged higher during early Asian trade on Wednesday, driven by optimism over a possible December interest rate cut by the Federal Reserve.

FUNDAMENTALS

* Spot gold was up 0.2% at $4,136.59 per ounce, as of 0054 GMT. U.S. gold futures for December delivery fell 0.1% to $4,134.00 per ounce.

* Markets are pricing in an 84% chance of a Fed rate cut next month, compared to 50% last week, according to CME Group data.

* Data on Tuesday showed that U.S. retail sales increased less than expected in September. A separate report showed that, in the 12 months through September, the Producer Price Index increased 2.7% after advancing by the same margin in August. * The data came on the heels of recent dovish remarks from Fed policymakers, reinforcing expectations for a rate cut.
* Meanwhile, U.S. Treasury Secretary Scott Bessent said on Tuesday the Fed’s system of managing interest rates is struggling and needs to be simplified.
* Gold, a non-yielding asset, tends to perform well in a low-interest-rate environment and during periods of geopolitical uncertainty.
* On the geopolitical front, a negative factor for prices was President Volodymyr Zelenskiy’s statement that Ukraine was ready to advance a U.S.-backed framework to end the war with Russia and discuss disputed points with U.S. President Donald Trump in talks he said should include European allies.

* The U.S. weekly jobless claims report is scheduled for release later on Wednesday.

* Top consumer China’s net gold imports via Hong Kong in October fell about 64% from September, data showed.

* Among other metals, spot silver slipped 0.1% to $51.36 per ounce, platinum lost 1% to $1,538.00, and palladium lost 1.1% to $1,382.24.