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Gold eased below the key $2,000 level on Wednesday, as the dollar stabilised from its recent drop, although expectations that the US Federal Reserve has reached the end of its tightening cycle put a floor under bullion prices.

Spot gold was down 0.1% at $1,996.33 per ounce, as of 0335 GMT.

Bullion scaled a three-week high of $2,007.29 in the previous session.

US gold futures eased 0.2% to $1,998.10. “Softer yields and the dollar have been a clear benefit for gold prices, all thanks to softer US economic data that has brought forward the case for the Fed’s first cut in 2024,” City Index senior analyst Matt Simpson said.

However, “the move lower in the US dollar looks overextended … And with an effective 4-day weekend looming in the US, gold currently lacks the legs to commit fully above $2,000.”

The dollar held steady against its rivals after dropping to a more than 2-1/2-month low in the last session, while benchmark US 10-year Treasury yields languished near two-month lows.

A weaker dollar makes gold less expensive for other currency holders.

Fed officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed.

Data on Tuesday showed US existing home sales dropped to the lowest level in more than 13 years in October.

Gold prices firm on expectations

Markets are currently pricing in a nearly 60% chance of a rate cut of at least 25 basis points by May, according to CME’s FedWatch Tool.

Lower interest rates decrease the opportunity cost of holding gold.

Swiss gold exports in October rose to their highest level since May as deliveries to India surged to meet demand during the country’s festive season, customs data showed.

Spot silver rose 0.1% to $23.75 per ounce, while platinum was steady at $933.98.

Palladium slipped 1.2% to $1,065.24.

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