Gold Prices Reach Two-Week High Amid Fed Comments and Rate Cut Expectations
Gold prices increased on Tuesday, reaching their highest point in about two weeks, as they resisted the strength of the US dollar. This rise was fueled by recent comments from Federal Reserve officials that have reignited expectations for a rate cut in December.
The spot gold price saw a slight increase of 0.1% to $4,146.41 per ounce, marking its highest level since November 14. Meanwhile, December US gold futures rose by 1.1% to $4,141.90 per ounce.
Kelvin Wong, senior market analyst at OANDA, noted that "the current movements in gold are primarily driven by expectations of rate cuts. Over the past two weeks, with the rapid rise in these expectations, gold has experienced a short-term recovery."
Wong added, "Market participants are currently paying close attention to all US economic data related to demand."
These remarks followed significant comments from Fed member Christopher Waller, who stated on Monday that "weakness in the labor market is sufficient to justify an additional quarter-point rate cut in December," emphasizing that future steps will depend on upcoming economic data that have been delayed due to the government shutdown.
New York Fed President John Williams mentioned last Friday that "US interest rates could decrease in the near future."
In this context, market expectations for rate cuts have significantly increased, with estimates from the CME Group FedWatch tool indicating an 81% probability of a Fed rate cut in December, up from just 40% the previous week.
Market participants are awaiting the release of important economic data this week, which have been postponed due to the government shutdown. This includes retail sales, jobless claims, and the producer price index, which are expected to provide clearer insights into the direction of monetary policy.
On the currency front, the dollar maintained its strength near a six-month high, which limited gains for gold priced in dollars.
In the precious metals market, silver prices held steady at $51.42 per ounce, while platinum rose by 1.1% to $1,560.60. Palladium saw a slight increase of 0.2% to $1,398.88 per ounce.
