Gold Holds Gains for Second Consecutive Session
Gold prices continued their upward trend during Tuesday's trading session, reaching their highest level in over a week, buoyed by growing expectations that the Federal Reserve will cut US interest rates in December.
This rise followed strong gains on Monday, exceeding 2%, after hawkish statements from several Fed policymakers.
Gold prices are currently trading near $4,130 per ounce, after touching a daily high of $4,155 per ounce.
Federal Reserve Officials' Comments Boost Rate Cut Likelihood
Market bets on an imminent rate cut increased after comments from Federal Reserve Governor Christopher Waller, who confirmed that the weak labor market could justify another quarter-point rate cut in December.
Waler indicated that any subsequent decisions would depend heavily on the economic data delayed due to the recent US government shutdown.
His comments followed those of John Williams, a member of the Federal Reserve Bank of New York, who predicted on Friday the possibility of interest rate cuts in the near future.
Upcoming US Economic Data Could Determine Market Direction
Investors are focused today on a series of delayed US economic data releases, which are expected to have a direct impact on interest rate expectations. These include:
- September Retail Sales
- Producer Price Index (PPI) data
- Unemployment Claims, due to be released tomorrow, Wednesday.
This data will contribute to a clearer picture of the state of the US economy and the extent to which weak demand will influence the Federal Reserve's decision at its upcoming meeting.
Markets Raise Expectations for a December Rate Cut
According to the CME FedWatch tool, the probability of the Federal Reserve cutting interest rates in December has risen to 81%, compared to just 40% last week, reflecting a clear shift in investor expectations regarding monetary policy.
Gold is considered one of the assets that typically benefit from a low interest rate environment, as it is a non-yielding asset and becomes more attractive to investors when bond yields and the dollar decline.
A Look at Gold's Movements
Currently, traders are awaiting the results of the upcoming economic data to determine the near-term direction of gold.
Any further signs of a slowdown in the labor market or weakness in consumer spending could push prices even higher, with the likelihood of an interest rate cut increasing, thus driving gold towards levels of $4,180 and then $4,215 per ounce.
As mentioned in our weekly analysis video here
