Gold Prices Reach Two-Week High Amid Fed Rate Cut Speculations
Gold prices rose to their highest level in approximately two weeks during trading on Tuesday, defying the strength of the U.S. dollar, as recent statements from Federal Reserve officials rekindled expectations of a potential interest rate cut in December.
Spot gold saw a modest increase of 0.1%, reaching $4,146.41 per ounce, marking its highest point since November 14, while December gold futures climbed 1.1% to $4,141.90 per ounce.
Kelvin Wong, senior market analyst at OANDA, noted that "current gold movements are primarily driven by expectations of interest rate cuts... Over the past two weeks, with the rapid rise in these forecasts, gold prices have experienced a short-term rebound."
Wong also mentioned, "Market participants are closely monitoring any U.S. economic data related to demand at this time."
These comments followed significant remarks from Federal Reserve member Christopher Waller, who stated on Monday that "weakness in the labor market is sufficient to justify an additional 25 basis point cut in December," emphasizing that future actions will depend on delayed economic data due to the government shutdown.
New York Fed President John Williams indicated last Friday that "U.S. interest rates could decrease (in the short term)."
In this context, market forecasts for a rate cut have significantly increased, with CME Group's FedWatch tool showing an 81% probability of a Fed rate cut in December, up from just 40% the previous week.
Market participants are awaiting key economic data this week that has been delayed due to the government shutdown, including retail sales, unemployment claims, and producer price index figures, which are expected to provide clearer insights into monetary policy direction.
Regarding currencies, the dollar has maintained its strength near a six-month high, thereby limiting the pace of gains for dollar-denominated gold.
In the precious metals market, silver remained steady at $51.42 per ounce, platinum rose 1.1% to $1,560.60, and palladium increased slightly by 0.2% to $1,398.88 per ounce.
