The precious metal shines again and reaches a two-week high
Gold prices rebounded strongly at the start of the week, hitting a two-week high of $4075 per ounce, in direct response to a combination of expectations of a more accommodative monetary policy and mounting fears of a slowdown in global economic growth.
Interest Rate Cut Expectations
Traders in global markets are increasingly optimistic that the U.S. Federal Reserve will cut interest rates again in December.
According to CME FedWatch, a tool that monitors monetary policy expectations, market participants see a 67% chance of such a cut.
Interest rate cuts reduce the cost of holding non-income-producing assets such as gold, increasing its investment appeal.
Gold is seeing strong demand from traders at the start of the week, as the precious metal rises amid expectations of a possible rate cut next month, although the Federal Reserve downplayed the likelihood of this happening at its most recent meeting.
global growth concerns
The recent string of weak economic data is increasing gold's appeal as a traditional safe haven.
US labor market data showed that the economy lost jobs in October, amid losses in the government and retail sectors, The wave of cost-cutting and companies adoption of artificial intelligence has led to an increase in announced layoffs.
Downbeat economic data weighs on investor
sentiment More negative economic data took center stage, fueling fears and pushing capital into safe havens.
At the end of last week, a survey revealed that U.S. consumer confidence fell to its lowest level in nearly three and a half years, following the longest government shutdown in U.S. history, which lasted for 40 days and whose economic effects are still worrying.
News from Washington suggests that the US Senate is on track to pass a deal to reopen the federal government, a positive development that could ease tensions in the near term.
The future of gold between monetary policy and economic indicators
Although the U.S. central bank tried at its last meeting to temper these expectations and reduce the likelihood of an immediate rate cut, the market is trading based on its own reading of the faltering economic data.
Traders seem to be jumping the gun, believing that continued signs of economic weakness may eventually force the Fed to move to support the economy.
Gold's future trajectory remains closely tied to any new economic data and any hints or statements from US central bank officials, as investors will be looking for evidence to confirm or deny their current expectations, thus the precious metal remains bullish based on current indicators until proven otherwise.
