Gold trimmed losses after a United States Federal Reserve official signaled an interest-rate cut is possible in the near term. New York Fed President John Williams said he sees room for the U.S. central bank to cut rates again in the near term as the labour market softens. In the text of a speech he delivered Friday in Santiago, Chile, Williams said downside risks to employment have increased while upside risks to inflation have eased.

Bond yields fell and the dollar pared gains after his remarks, supporting bullion. Swap traders now price in a 68 per cent chance of a December rate reduction, up from around 35 per cent before the speech. Lower rates typically benefit gold as it pays no interest.

Williams’ comments came as Fed Chair Jerome Powell tries to forge a consensus among a fractured group of policymakers in time for their Dec. 9-10 gathering in Washington. Following a second consecutive rate cut in October, a number of officials voiced their opposition to, or uncertainty about, supporting a third straight move in December.

Geopolitical tensions also helped support bullion. The leaders of Germany, France and the U.K. agreed on a call with Ukrainian President

Volodymyr Zelenskyy that Ukraine’s armed forces must remain capable of defending its sovereignty, rejecting key elements of a U.S.-Russia plan to end the war there. The U.S. threatened to cease provision of intelligence and weapons to Ukraine to press it to agree to the framework of the deal, Reuters said.

Despite its pullback from a record high last month, gold has gained more than 50 per cent this year and remains on course for its best annual performance since 1979. A scorching rally has been supported by inflows to exchange-traded funds, as well as central bank purchases. Many analysts saw the more rapid gains chalked up in the second half of the year as overstretched, as a “debasement trade” narrative about a retreat from sovereign debt and currencies took hold.

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Gold fell 0.2 per cent to US$4,070.21 an ounce as of 11:01 a.m. in New York. The Bloomberg Dollar Spot Index was up 0.1 per cent. Silver declined 1.9 per cent, while platinum rose and palladium fell.