Gold prices rose on Tuesday to their highest level in nearly three weeks, supported by growing expectations of another U.S. Federal Reserve interest rate cut in December and signs of progress toward ending the U.S. government shutdown.

As of 06:36 GMT, spot gold was up 0.4% at $4,131.32 per ounce, its highest since October 23. U.S. gold futures for December delivery also gained 0.4% to $4,137.50 per ounce.

The rise in gold prices comes as investors anticipate that the Federal Reserve could lower borrowing costs again before the end of the year, a move that typically boosts non-yielding assets such as gold.

Market analysts noted that easing concerns over the U.S. fiscal standoff have also supported market sentiment, though uncertainty surrounding the long-term budget deal continues to drive demand for safe-haven assets.

A weaker U.S. dollar and lower real bond yields have further increased gold’s attractiveness, making it more affordable for holders of other currencies.

According to live market data on Tuesday, gold continued to trade above the $4,130 per ounce level later in the session, maintaining upward momentum amid strong investor demand.

Analysts said gold could remain supported in the short term if inflation pressures persist and expectations of further monetary easing strengthen ahead of the Fed’s December meeting.

“Gold is benefitting from both lower yields and renewed rate-cut expectations,” one commodities strategist said. “If the Fed signals a dovish tone in the coming weeks, we could see prices testing new highs.”

Gold has gained nearly 4% since the start of November, reflecting growing investor confidence that U.S. monetary policy is shifting toward easing after a prolonged tightening cycle. (ILKHA)