Gold Prices Surge to Two-Week High Amid Federal Reserve Rate Cut Speculation
Gold prices surged to their highest levels in two weeks during trading on Tuesday, countering the strength of the US dollar, as remarks from Federal Reserve officials rekindled anticipation of a possible rate cut in December.
Spot gold saw a modest increase of 0.1%, reaching $4146.41 per ounce, marking its highest price since November 14, while US gold futures for December delivery rose by 1.1% to $4141.90 per ounce.
Kelvin Wong, a senior market analyst at OANDA, stated, "The current movements in gold are largely influenced by expectations of a rate cut... Over the past two weeks, these rising expectations have contributed to a short-term recovery in gold prices."
Wong further noted, "Market participants are closely monitoring US economic data related to demand."
These insights followed significant comments from Federal Reserve member Christopher Waller, who indicated on Monday that "the weakness in the labor market is enough to warrant an additional quarter-point cut in December," stressing that future actions will depend on forthcoming economic data impacted by the government shutdown.
New York Federal Reserve President John Williams remarked last Friday that "US interest rates may decrease in the near term."
In light of these developments, market expectations for a rate cut have surged, with estimates from the CME Group's FedWatch tool suggesting an 81% probability of the Fed reducing rates in December, up from 40% the previous week.
Investors are awaiting the release of critical economic data that has been postponed due to the government shutdown, including figures on retail sales, unemployment claims, and the producer price index, which are anticipated to offer clearer insights into future monetary policy.
In the currency market, the dollar remained robust near a six-month high, which tempered the pace of gains for gold priced in dollars.
In other precious metals, silver held steady at $51.42 per ounce, while platinum increased by 1.1% to $1560.60, and palladium saw a slight rise of 0.2% to $1398.88 per ounce.
