Gold hits near three-week high

Spot gold was up 0.7% at $4,142.83 per ounce, its highest since October 24

Gold extended gains to a near three-week high on Tuesday, helped by growing expectations of another U.S. central bank rate cut in December.

Spot gold was up 0.7% at $4,142.83 per ounce by 0314 GMT, its highest since October 24.

The U.S. Senate passed a deal that would restore federal funding and end the longest shutdown late on Monday.

Key economic indicators such as the non-farm payrolls report have been delayed due to the federal government shutdown. An end to the shutdown in the coming days will offer more clarity on the country’s economic outlook and the central bank’s interest rate path.

The idea that the shutdown is ending was really more met as lifting a level of uncertainty that gave markets permission to reengage with what has been one of the main speculative narratives this year, said Ilya Spivak, head of global macro at Tastylive.

The bias for the rest of the year is at this point favouring the upside still. At this point, the path of least resistance for gold is back to October’s high, and then we might be heading higher thereafter, Spivak said.

Last week, data showed the U.S. economy shed jobs in October amid losses in the government and retail sectors.

Consumer sentiment weakened to a 3-1/2-year low in early November amid concerns about the economic fallout from the longest-ever government shutdown, a survey showed on Friday.

Traders are pricing in a roughly 64% probability that the U.S. central bank will cut rates by 25 basis points next month, according to CME Group’s FedWatch tool.

Fed Governor Stephen Miran said on Monday a 50-bps rate cut would be appropriate for December, noting that inflation is dropping while the unemployment rate is drifting higher.