NEW YORK, Dec 28 (Reuters): Gold prices steadied after hitting a more than three-week high on Thursday, deriving support from a weaker US dollar and lower bond yields as markets bet on rate cuts by the Federal Reserve early next year.
Spot gold was steady at $2,072.09 per ounce at 1206 GMT after earlier rising as high as 2,088.29, the most since Dec. 4. US gold futures were down 0.5 per cent at $2,082.20.
The dollar index fell to a fresh five-month low and was headed for a yearly decline. The benchmark 10-year bond yield was down near its lowest levels since July, boosting bullion's appeal.
"Lack of catalysts in a period of thin liquidity is likely keeping gold steady. Next catalyst ... is likely to come from the leading indicators (ISM, PMI) and the job report at the start of 2024," UBS analyst Giovanni Staunovo said.
"We look for higher gold prices over the next 12 months, with weaker economic data and lower inflation in the US forcing the Fed to cut rates and this should support gold."
Markets are now waiting for US initial jobless claims data at 1330 GMT.
Investors are betting on an 88 per cent chance of the Fed cutting rates as early as March, according to the CME FedWatch tool, a huge swing from a month ago when the probability was just 21 per cent.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
On the physical front, China's net gold imports via Hong Kong rose about 37 per cent in November from the previous month, data showed.
Spot silver was steady at $24.2276 per ounce and poised to end the year about 1.2 per cent higher.
Platinum was flat at $993.65 and palladium fell 1.7 per cent to $1,134.13.
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