Gold prices rose on Friday, setting the stage for a third consecutive monthly increase, fueled by bargain hunting and a Federal Reserve interest rate cut that enhanced demand, as investors evaluated a tentative trade agreement between China and the U.S. Spot gold rose by 0.3% to $4,034 per ounce, as of 0109. Bullion has experienced a 4.5% increase this month. Gold futures in the U.S. for December delivery declined by 1.1%, settling at $3,955 per ounce. On Wednesday, the U.S. central bank lowered interest rates by 25 basis points for the second occasion this year, adjusting the benchmark overnight rate to a target range of 3.75%-4.00%. Gold, which does not yield income, tends to thrive in environments characterized by low interest rates and periods of economic uncertainty.

Market participants have scaled back their anticipations for a Federal Reserve rate cut at the forthcoming policy meeting on December 10, in light of remarks made by Fed Chair Jerome Powell. Markets currently indicate a 74.8% probability of a 25-basis-point reduction from the Fed in December, a decrease from the 91.1% probability observed just a week earlier, according to the reports. Gold’s gains were limited as the dollar index hovered near its highest level in three months against other currencies, making bullion more expensive for holders of alternative currencies.

U.S. President Donald Trump announced on Thursday that he has reached an agreement with Chinese President Xi Jinping to reduce tariffs on China. In exchange, Beijing will implement measures to combat the illicit fentanyl trade, resume purchases of U.S. soybeans, and guarantee the ongoing export of rare earth elements. In the third quarter, global gold demand rose by 3% year-on-year to reach 1,313 metric tons, representing the highest quarterly figure on record. This increase was primarily fueled by a notable surge in investment demand, as detailed in the World Gold Council’s report released on Thursday.

Meanwhile, SPDR Gold Trust, the largest gold-backed exchange-traded fund globally, reported that its holdings increased by 0.42% to 1,040.35 tons on Thursday, up from 1,036.05 tons on Wednesday. Elsewhere, spot silver remained unchanged at $48.92 per ounce, platinum increased by 0.2% to $1,613.50, and palladium advanced by 2.1% to $1,474.5174.