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Gold price (XAU/USD) extends its upside to around $4,305, the highest since October 21, during the early Asian trading hours on Tuesday. The precious metal edges higher on further US Federal Reserve (Fed) cut bets. The US Nonfarm Payrolls (NFP) report will take center stage later on Tuesday. Also, the US Retail Sales and Purchasing Managers Index (PMI) will be published. 

The US Fed implemented its third cut of the year last week and signaled an additional rate reduction next year, supporting the yellow metal. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.

According to the Summary of Economic Projections (SEP), or so-called “dot plot,” the median forecast points to only one 25 basis points (bps) rate cut by the end of 2026. However, financial markets are generally pricing in the probability of at least two rate reductions by the year-end.

The US federal shutdown has delayed the publication of a collection of US economic data, which will be released later on Tuesday. Traders await the US employment data for more clues about the US interest rate path. "If the data point to a meaningful slowdown, I believe this would reinforce bets on rate cuts and push gold to test higher levels," said Rania Gule, senior market analyst at XS.com.

On the other hand, optimism surrounding Ukraine peace talks could undermine a traditional safe-haven asset like Gold. US officials said on Monday that an agreement with Ukrainian President Volodymyr Zelenskyy to end its war with Russia was nearly complete, although territorial disputes remain unresolved and a strong security guarantee from the US and European countries remains a sticking point.

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