Gold prices rose by about 1% on Wednesday, as traders bought after the precious metal fell to its lowest level in about a week during the previous session, while attention turned to US private sector employment data for clues about the path of future interest rate cuts.
Gold rose 1.04% in spot trading to $3,972.71 an ounce, after losing more than 1.5% on Tuesday to its lowest level since October 30.
US gold futures for December delivery rose 0.6% to $3,985.20 an ounce.
The dollar remained stable near its highest level in nearly three months, which it recorded during the previous session, while gold received support from bargain hunting and increased demand for safe havens amid a risk aversion in global markets.
“What we are seeing in gold right now is selective buying supported by a general sense of caution in the financial markets, which is boosting demand for safe havens,” said Jigar Trivedi, senior currency analyst at Reliance Securities, to Reuters.
Asian stocks extended their losses at the start of trading on Wednesday, following the overnight sell-off on Wall Street, as investors grew increasingly concerned about overvalued stocks.
Trivedi added that “gold is under pressure due to declining expectations of another interest rate cut this year, and could see further declines towards the $3,900 level if US employment data comes in stronger than expected.”
The US Federal Reserve cut interest rates last week, in a move that its chairman, Jerome Powell, indicated could be the last this year.
