Gold steadies at near two-week high as investors weigh Fed rate-cut bets

Gold prices remained steady on Thursday after hitting a more than one-week high in the previous session, as market participants weighed the possibility of an interest rate cut in December amid conflicting signals from the US Federal Reserve.

FUNDAMENTALS

* Spot gold was steady at USD 4,162.98 per ounce, as of 0047 GMT. US gold futures for December delivery fell 0.1% to USD 4,158.60 per ounce.

* Conflicting signals on the timing and magnitude of interest rate cuts have accelerated hedging flows into swaptions and derivatives tied to overnight rates, with investors seeking protection against heightened policy uncertainty.

* Some Fed officials, led by New York Fed President John Williams and Governor Christopher Waller, have stated a December rate cut may be warranted due to labor market weakness putting downward pressure on Treasury yields and reinforcing dovish bets in futures markets.

* Benchmark 10-year Treasury yields held near one-month lows in the previous session.

* Their stance, however, contrasted with several regional Fed presidents advocating a pause in easing until inflation shows a more convincing move toward the 2% target.

* Meanwhile, Kevin Hassett, who has emerged as a frontrunner to replace Jerome Powell as Fed Chair, like US President Donald Trump, has said interest rates should be lower.

* US rate futures are pricing in an 85% chance of a rate cut in December, according to the CME’s FedWatch tool.

* Non-yielding gold tends to perform well in low-interest-rate environments.

* Data on Wednesday showed that the number of Americans filing new applications for unemployment benefits fell last week, though the labor market is struggling to generate enough jobs for those out of work.

* US consumer confidence also weakened in November as households grew more concerned about jobs and their financial outlook.

* Elsewhere, spot silver was flat at USD 53.34 per ounce, platinum fell 0.3% to USD 1,583.94, and palladium lost 0.4% to USD 1,417.56.

(Reporting by Ishaan Arora in Bengaluru; Editing by Rashmi Aich)