Gold Prices Reach Three-Week High Amid Expectations of U.S. Rate Cuts
Gold prices rose to their highest point in about three weeks during trading on Tuesday, buoyed by mounting expectations that the U.S. Federal Reserve will implement interest rate cuts next month, prompting investors to turn to the precious metal as a safe haven.
In market activity, the spot price of gold increased by 0.4% to $4,135.55 per ounce, while U.S. gold futures for December delivery rose by 0.6% to $4,147.60 per ounce.
This uptick coincides with recent U.S. economic indicators that reveal a downturn in the labor market and consumer confidence. The U.S. economy reported job losses in October, particularly in the government and retail sectors, while consumer confidence fell to its lowest level in three and a half years in November, amid concerns over the longest government shutdown in U.S. history.
According to the CME Group's "FedWatch" tool, traders are now anticipating a 64% likelihood that the Federal Reserve will cut interest rates by 25 basis points next month.
Federal Reserve member Stephen Miran stated on Monday that "a 50 basis point cut would be appropriate in December," citing declining inflation and rising unemployment rates.
Gold, a non-yielding asset, tends to gain appeal in low interest rate environments and sees heightened demand during times of economic uncertainty.
It is important to note that the U.S. Senate approved a measure on Monday to end the longest government shutdown in U.S. history, resolving a crisis that disrupted food assistance for millions and left hundreds of thousands of government employees without pay.
