Gold prices surge, poised for fourth consecutive monthly gain, as markets anticipate U.S. rate cut
Gold prices soared on Friday, marking a fourth straight monthly increase, fueled by investor confidence in the U.S. Federal Reserve's decision to lower interest rates in December. This optimism has driven gold prices to their highest level since November 14, with a projected 3% weekly gain and a 3.9% monthly rise in the offing.
Spot gold prices climbed 0.8% to $4,189.61 per ounce by 3:03 GMT, while U.S. gold futures for December delivery rose 0.5% to $4,221.30 per ounce. KCM Trade Chief Market Analyst Tim Waterer attributed the upward trend to pre-positioning in anticipation of a lower interest rate environment, noting thin liquidity conditions that amplify market movements.
The U.S. rate futures market predicts an 87% chance of a rate cut in December, up from 85% the day prior and 50% a week ago, according to the CME's FedWatch tool. This sentiment has been bolstered by comments from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller, as well as the stance of Kevin Hassett, a front-runner to replace Jerome Powell as Fed Chair, who, like U.S. President Donald Trump, advocates for lower interest rates.
However, this stance contrasts with the views of several regional Fed presidents who advocate for a pause until inflation aligns more closely with the U.S. central bank's 2% target. Non-yielding gold tends to perform well in low-interest-rate environments.
The U.S. dollar is on track for its worst week since late July, making dollar-priced gold more attractive to buyers using other currencies. Investors speculate that Hassett's leadership at the Fed could further pressure the dollar.
In other precious metal news, spot silver rose 1.4% to $54.18 per ounce, platinum gained 1.7% to $1,634.82, and both are up 7.4% for the week. Palladium lost 0.6% to $1,428.62 but is set for a 4% weekly gain.
