Gold hits near 2-week high on bets for easing rate hikes

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Gold prices jumped over 1% on Wednesday as the dollar and bond yields weakened amid signs that the U.S. Federal Reserve's aggressive rate hikes were dampening inflationary pressures, prompting speculation that it could shift to smaller rate rises.

While the Fed is still widely expected to deliver a 75-basis-point rate hike in November, it's also likely to debate how much higher it can safely push borrowing costs.

"A calibration in the pace of Fed tightening may slow the pace of gold's decline, but a dovish pivot would be key for gold prices to regain its allure," Christopher Wong, a currency strategist at OCBC, said in a note.

Spot gold gained 1.3% to $1,674.09 per ounce by 0905 GMT, touching its highest since Oct. 13.

U.S. gold futures rose 1.3% to $1,678.60.

Despite a rebound in equities, gold is benefiting from a weaker dollar and some expectations of a slowdown in the pace of Fed rate hikes, said UBS analyst Giovanni Staunovo.

But, he said the large rate rises still expected at coming meetings could result in gold falling to $1,600 by the end of the year.

Data on Tuesday showed U.S. consumer confidence ebbed in October, home prices fell sharply in August and there were signs that the Fed's aggressive stance was starting to cool the labour market.

Taking cues from the data, yields on the 10-year Treasury note fell, while the dollar index touched its lowest level since Sept. 20, lifting gold's appeal for those holding other currencies.

On the data front, investors are also focussing on the U.S. GDP and a European Central Bank meeting on Thursday, followed by U.S. core inflation numbers on Friday.

Elsewhere, spot silver rose 2.2% to $19.76 per ounce, platinum jumped 2.2% to $934.88, and palladium gained 1.8% to $1,957.32.