Gold Hits 1-Week High as Dovish Fed Signals Boost December Rate-Cut Bets

Gold extended its rally on Tuesday, climbing to its highest level in more than a week as dovish comments from Federal Reserve officials reignited hopes of a U.S. interest rate cut in December—helping the metal shrug off a firm dollar.

Spot gold inched up 0.1% to $4,140.85 per ounce by 0457 GMT, building on Monday’s strong 1.8% jump. U.S. gold futures for December delivery also rose 1.2% to $4,141.20.

Analysts say the rebound is being fueled almost entirely by shifting rate expectations.
“Gold is being driven by expectations of a rate cut… expectations shot up rapidly, causing prices to recover in the short term,” said Kelvin Wong of OANDA.

Traders are watching upcoming U.S. data—retail sales, jobless claims, producer prices—more closely than ever to see whether weakening demand outweighs sticky inflation concerns.

Fed Governor Christopher Waller signaled Monday that the job market is soft enough to justify another quarter-point cut, while New York Fed President John Williams said last week that rates could fall “in the near term.”

Rate-cut odds for December now stand at 81%, up sharply from 40% just a week ago, according to the CME FedWatch Tool.

Lower interest rates typically boost non-yielding assets like gold, making the current environment supportive for further upside.

The dollar held near six-month highs, limiting some of gold’s momentum, but not enough to halt its climb.

In other metals, silver rose 0.2% to $51.49, platinum gained 1% to $1,559.61, and palladium added 0.3% to $1,399.25.