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Gold reaches two-week highs as US data weakens and rate cuts are expected

Gold prices rose by 2% Monday, reaching their highest level for two weeks. Weak U.S. data increased expectations of a Federal Reserve rate reduction next month. A weaker dollar also helped to support gold.

Gold spot rose 2% by 839 GMT to $4,079.49 an ounce, its highest level since October 27. U.S. Gold Futures for December Delivery rose 1.9% to $ 4,087.80 an ounce.

Gold is now more affordable to overseas buyers due to the drop in the dollar index.

The dollar index is the focus of attention due to the lackluster data. Jigar Trivedi said, "Safe-haven purchases have also increased because of geopolitical tensions and the ongoing trade war."

Last week, data showed that the U.S. economy lost jobs in October. These losses were in the retail and government sectors. Businesses cutting costs and adopting AI also contributed to the surge of announced layoffs.

A survey released on Friday revealed that the U.S. consumer's sentiment dropped to its lowest level for nearly three-and-a half years early in November due to concerns over the economic impact of the longest government shutdown ever.

The U.S. Senate passed a bill on Sunday that would reopen federal government offices and end the shutdown of 40 days.

In an interview broadcast on Sunday, White House economist Kevin Hassett warned that the U.S. economy could experience a negative fourth-quarter growth if the government shutdown continues.

The market participants see a 66% chance that the Fed will cut rates in December.

Gold tends to do well when interest rates are low and there is economic uncertainty.

Trivedi stated that "it's an overall win for gold, and the undertone of bullishness is strong... we could see levels near $4,120-4,130 in the future."

The price of spot silver increased 3.3%, to $49.91 an ounce. This is the highest level since October 21. Platinum rose 2%, to $1.576.25, and palladium rose 1.7%, to $1.403.63. (Reporting and editing by Emelia Sithole Matarise in Bengaluru)

(source: Reuters)