Gold prices: The yellow metal prices are poised to mark their fourth consecutive monthly gain amid expectations of Federal Reserve rate cuts. With gains in nearly every month this year, gold is expected to report its best annual performance since 1979, despite a challenging economic data landscape resulting from a government shutdown, Bloomberg reported.
On Friday, bullion stood at around $4,170 per ounce, marking a more than 2% increase for the week. Comments from Fed officials and the release of delayed economic data have strengthened the case for lower borrowing costs, which generally favour gold since it doesn’t generate interest. Swap traders are now expecting an over 80% chance of a quarter-point rate cut in December, the report noted.
Traders are carefully analysing every hint regarding the upcoming rate decision before the US Federal Reserve enters a communication blackout starting Saturday. A historic government shutdown has postponed crucial data releases, and some statistics will be missing entirely, complicating the Fed’s and investors’ efforts to evaluate the health of the world’s largest economy.
Bullion has increased almost every month this year and is on course for its best annual performance since 1979. Heightened central-bank buying as well as strong non-sovereign inflows into exchange-traded funds have supported the metal’s rise to a record above $4,380 last month. Investors have flocked to alternative assets amid a broader retreat from sovereign bonds and currencies.
In November, the precious metal has maintained a level above $4,000 per ounce after retreating from its peak. Over the past three weeks, inflows into gold-backed ETFs have remained steady, according to Bloomberg data.
Gold increased by 0.3%, reaching $4,171.18 per ounce as of 8:30 am in Singapore. The Bloomberg Dollar Spot Index saw a slight decline. US gold futures for December delivery rose 0.3% to $4,215.80 per ounce.
US Fed rate cut next month?
US rate futures now indicate an 87% probability of a rate cut in December, up from 85% the previous day, the report said, citing the CME’s FedWatch tool.
San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller‘s backing have strengthened expectations for a rate cut this week. However, their position differs from several regional Fed presidents who prefer to pause until inflation more clearly approaches the 2% target.
Meanwhile, Kevin Hassett, a leading candidate to succeed Jerome Powell as Fed Chair, has echoed U.S. President Donald Trump in advocating for lower interest rates. Notably, non-yielding gold typically performs better when interest rates are low.
(With inputs from agencies.)
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