Gold prices rose on Tuesday, supported by top consumer China’s pledge to increase stimulus to help boost economic growth. Investors are awaiting U.S. inflation data to better understand the Federal Reserve’s interest rate outlook.
Spot gold gained 0.4% to $2,669.84 an ounce, by 0248 GMT. U.S. gold futures rose 0.3% to $2,692.50.
Gold hit its highest level in two weeks on Monday, supported by the Chinese central bank’s resumption of purchases after a six-month pause.
The country will also adopt a sufficiently loose monetary policy next year, as well as a more proactive fiscal policy to boost economic growth, the Politburo said.
This is a “change from the cautious position taken for almost 14 years.” Therefore, a further reduction in interest rates in China could boost gold buying demand,” said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.
“Second, safe-haven demand has resurfaced as China has opened an investigation into US artificial intelligence giant Nvidia for alleged violations of anti-monopoly law, suggesting further retaliatory measures could emerge between the United States and China.
Traders are now focusing on US inflation data for November after last week’s higher-than-expected payrolls report boosted chances of an interest rate cut from the Fed next week.
The odds of a quarter-point rate cut on December 18 are currently 85.8%, according to the CME’s Fedwatch tool.
The European Central Bank is also expected to cut rates by a quarter point at its meeting on Thursday.
Gold, which does not pay interest, tends to benefit from falling interest rates, which reduce the opportunity cost of holding bullion.
Furthermore, the United States and Great Britain announced a new wave of sanctions targeting the illicit gold trade.
Spot silver gained 0.6% to $31.98 an ounce, platinum settled at $940.15 and palladium rose 0.3% to $976.25.
