Gold extended gains on Tuesday to hit its highest in more than a week, brushing off a firm dollar, after dovish comments from Federal Reserve policymakers revived prospects of a U.S. rate cut in December.
Spot gold rose 0.1% to $4,141.49 per ounce by 0631 GMT, the highest since November 14, building on a 1.8% advance on Monday.
U.S. gold futures for December delivery were 1.1% higher at $4,139.10 per ounce.
"(Gold is primarily being) driven by expectations of a rate cut ... in the last two weeks and since expectations shot up (rapidly), it caused gold prices to recover in the short term," OANDA senior market analyst Kelvin Wong said.
"Market participants will be viewing any demand-related U.S. economic data, with much more interest right now to see whether the Fed's concerns regarding a softer demand situation, could be labor market, retail sales, or consumer confidence, outweigh the so-called sticky inflation situation."
The job market is weak enough to warrant another quarter-point rate cut in December, though action beyond that depends on an upcoming flood of data delayed by the government shutdown, Fed Governor Christopher Waller said on Monday.
Waller's comments come after New York Fed President John Williams said on Friday that U.S. interest rates could fall "in the near term."
Investors are now pricing in an 81% chance of a rate cut in December, up from 40% last week, as per the CME FedWatch Tool.
Non-yielding gold tends to do well in a low-interest-rate environment.
Key economic data delayed by the government shutdown, including U.S. retail sales, jobless claims and producer price figures, are due to be released this week and are expected to offer more clarity on the Fed's rate-cut path.
The dollar held firm near six-month highs hit last week, capping gains in greenback-priced gold.
Elsewhere, spot silver was steady at $51.43 per ounce, platinum rose 0.7% to $1,553.65, and palladium gained 0.3% to $1,399.96. - Reuters
