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BENGALURU: Gold steadied near its highest in about seven months on Wednesday as expectations that the US Federal Reserve may cut interest rates by the first half of next year boosted the outlook for zero-yield precious metal.

Spot gold was up 0.1% to $2,043.58 per ounce by 10:17 a.m. ET (1517 GMT), after hitting its highest since May 5. US gold futures rose 0.3% $2,044.90.

“Our belief is that there could be some pullback in gold next week, but in general, we believe this trend of sideways to higher momentum will continue in the near future,” said David Meger, director of metals trading at High Ridge Futures.

“The current belief is that the Fed is done hiking rates and rate cuts will come by 2024, if data supports or undermines that argument, we will see the gold market trade accordingly.”

Lower rates boost demand for non-yielding gold. Traders are now pricing in a more than a 70% chance of rates easing in May, up from 50% on Tuesday, CME’s FedWatch Tool showed.

Fed Governor Christopher Waller on Tuesday flagged a possible rate cut in the months ahead.

The dollar index rose 0.2% for the day but was poised to mark its worst monthly performance in a year. A weaker dollar makes gold cheaper for overseas buyers.

Also helping gold, benchmark 10-year Treasury yields fell to an over two-month low.

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