Investing.com - Gold prices rose to a three-week high during Europe's session on Wednesday, as the U.S. dollar backed away from nine-month peaks hit overnight, boosting the appeal of the precious metal.
Gold for December delivery on the Comex division of the New York Mercantile Exchange touched a session high of $1,277.15 a troy ounce, the most since October 5.
It was last at $1,276.05 by 3:10AM ET (07:10GMT), up $2.35, or 0.18%, after rallying $9.90, or 0.78%, on Tuesday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 98.60 early Wednesday, after hitting highs of 99.09 overnight, its strongest level since February 1.
Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Despite recent gains, the outlook for gold remains cloudy as a recent string of positive U.S. economic data combined with hawkish remarks from key Fed officials heightened expectations for an interest rate hike before the end of the year.
The U.S. central bank’s next meeting is in November, but a rate hike ahead of the presidential election is seen as unlikely. Instead, traders are currently pricing in around a 74% chance of a rate hike at the Fed's December meeting, according to Investing.com's Fed Rate Monitor Tool.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
Also on the Comex, silver futures for December delivery tacked on 3.8 cents, or 0.21%, to $17.81 a troy ounce during morning hours in London, while copper futures dipped 0.8 cents, or 0.35%, to $2.131 a pound.