Gold holds gain amid Fed rate cut hopes

Gold prices hovered around $4,130 per ounce on Tuesday, after rising nearly 2% the previous day, as expectations of a US interest rate cut next month have increased further following dovish signals from Federal Reserve officials.

Fed Governor Christopher Waller said on Monday that he supports a rate cut in December, citing persistent weakness in the US labor market. His comments echoed those of San Francisco Fed President Mary Daly and New York Fed President John Williams.

Markets now assign an 81% probability to a 25bps cut in December, up sharply from around 40% a week ago.

Investors are now awaiting September retail sales and PPI data due later today, as well as weekly jobless claims on Wednesday, for further insights into the health of the US economy and the likely path of Fed policy.