Gold Hits Three-Week High Amid Expectations of U.S. Interest Rate Cuts
Gold prices reached their highest point in about three weeks during trading on Tuesday, buoyed by rising expectations that the U.S. Federal Reserve will cut interest rates next month, prompting investors to seek the precious metal as a safe haven.
In the markets, spot gold prices increased by 0.4%, reaching $4,135.55 per ounce, while U.S. gold futures for December rose by 0.6% to $4,147.60 per ounce.
This rise comes amid recent U.S. economic data indicating a decline in the labor market and consumer confidence, with job losses reported in October, particularly in government and retail sectors. Additionally, consumer confidence fell to its lowest level in three and a half years in November, amid concerns over the implications of the longest government shutdown in U.S. history.
In this context, the CME Group's "FedWatch" tool indicates that traders are now pricing in a 64% chance that the U.S. central bank will reduce interest rates by 25 basis points next month.
Federal Reserve member Stephen Miran confirmed on Monday that "a 50 basis point cut would be appropriate in December," citing declining inflation and rising unemployment rates.
Gold, which does not yield interest, benefits from a low-interest-rate environment and typically sees price increases during periods of economic uncertainty.
It is worth noting that the U.S. Senate approved an agreement on Monday to end the longest government shutdown in U.S. history, resolving a crisis that disrupted food assistance for millions and deprived hundreds of thousands of government employees of their paychecks.
