Gold extended gains after surging 1.3% to the highest level since May on Tuesday, as comments from Federal Reserve officials bolstered bets it will start cutting interest rates next year.

The dollar weakened and Treasuries added to their November rally after Governor Christopher Waller, one of the most hawkish Fed officials, said policy is well positioned to return inflation to the central bank’s 2% goal, suggesting rates may not need to rise again. Lower borrowing costs are typically negative for non-yielding bullion.

Bullion has rallied about 12% since early October, initially fueled by haven buying in the wake of the Israel-Hamas conflict. This week, investors will be closely watching US economic data, including the Fed’s preferred measure of underlying inflation, for further clues on the direction of interest rates.

Meanwhile, traders are increasingly positioning for a hard economic landing and aggressive policy easing next year, with speculators in the US Treasury market now the most bullish on record, according to a weekly survey conducted by JPMorgan Chase & Co. since 1991.

Spot gold rose 0.2% to $2,045.28 an ounce at 5:42 a.m. in London, after jumping the most in about six weeks on Tuesday. It was about $30 short of its all-time high. The Bloomberg Dollar Spot Index dipped 0.2% following its 0.4% decline in the previous session. Silver, platinum and palladium all dropped.

--With assistance from Swansy Afonso.