Gold prices hit a two-week high on Thursday, supported by a weaker dollar after US Federal Reserve Chair Jerome Powell’s speech sparked expectations of smaller interest rate hikes.

Spot gold was up 0.8% at $1,781.79 per ounce, as of 0546 GMT, after scaling a peak since Nov. 16. US gold futures climbed 1.9% to $1,793.80.

The Fed could scale back the pace of its rate hikes “as soon as December,” Powell said on Wednesday at the Brookings Institution in Washington.

The dollar index inched 0.5% lower, making gold more attractive for overseas buyers. Powell effectively confirmed that the Fed will slow its pace of tightening, prompting the dollar lower and gold higher, said City Index Analyst Matt Simpson.

Market participants now expect a 91% chance of a 50-basis-point hike in the central bank’s upcoming December meeting.

Lower rates tend to boost bullion’s appeal as it reduces the opportunity cost of holding the non-yielding asset, which ended November more than 8% higher — its biggest monthly gain since July 2020.

Investors’ attention now turns to the US Labor Department’s non-farm payrolls data due on Friday, and it is likely to influence the Fed’s policy decisions.

“A strong employment report will give Fed the green light to keep hiking whilst inflation remains high, which is bad for gold.

A weak report could be beneficial for gold as it points to lower consumer demand ahead, which is deflationary,“ added Simpson. Traders also took stock of news that top bullion consumer China is easing some COVID-related restrictions.

Gold rebounds 1% as tepid dollar offsets rate-hike fears

“If China eases its COVID measures and the economy starts to improve, physical gold demand will rise and demand for industrial metals will also pick up,” said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.

Silver edged up 0.8% at $22.37, platinum rose 0.8% to $1,041.38 and palladium gained 1.5% to $1,910.00.