- Gold hits highest since Dec. 4 record peak
- Markets bet on 87% chance of Fed rate cut in March
- Platinum hits highest level since June
Dec 28 (Reuters) - Gold prices steadied on Thursday, after hitting a more than three-week high earlier, as an uptick in U.S. bond yields undermined the support from expectations of rate cuts by the Federal Reserve early next year.
Spot gold lost 0.2% to $2,073.32 per ounce by 12:12 p.m. ET (1712 GMT), after rising as high as $2,088.29 earlier, the most since Dec. 4, when bullion hit its all-time peak.
U.S. gold futures were down 0.5% to $2,083.70.
"The reason prices have gone back near the horizon and rallied again towards the end of the year is all about interest rate expectations and a weaker dollar," said Chris Gaffney, president of world markets at EverBank.
The dollar index came off a five-month low and was heading for a yearly decline. Benchmark 10-year bond yields picked up, but were also close to their lowest levels since July.
The number of Americans filing initial claims for unemployment benefits rose last week, indicating the labor market continues to cool in the year's fourth quarter.
Investors are betting on an 88% chance of the Fed cutting rates in March, according to the CME FedWatch tool.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
"We look for higher gold prices over the next 12 months, with weaker economic data and lower inflation in the U.S. forcing the Fed to cut rates," UBS analyst Giovanni Staunovo said.
On the physical front, China's net gold imports via Hong Kong rose by about 37% in November from the previous month, data showed.
Spot silver fell 0.5% to $24.12 per ounce.
Platinum gained 0.7% to $1,003.44, hitting its highest since June, while palladium dropped 2.4% to $1,125.70. Both autocatalytic metals were on track to log yearly declines.
Reporting by Anjana Anil and Deep Vakil in Bengaluru; editing by Barbara Lewis and Sharon Singleton
Source: Reuters