Gold scales near three-week peak on Fed rate cut bets

Synopsis

Gold prices climbed to a near three-week high as expectations of a December U.S. Federal Reserve interest rate cut boosted demand for the safe-haven asset. Recent data showing job losses and weakened consumer sentiment, coupled with a prolonged government shutdown, are fueling these rate cut expectations. Traders are pricing in a significant probability of a rate reduction next month.

Gold extended gains to a near three-week high on Tuesday, as growing expectations of another U.S. Federal Reserve interest rate cut in December lifted demand for the safe-haven asset.

FUNDAMENTALS

* Spot gold was up 0.4% at $4,131.83 per ounce by 0053 GMT, its highest since October 24. U.S. gold futures for December delivery rose 0.4% to $4,138.70 per ounce.

* Last week, data showed the U.S. economy shed jobs in October amid losses in the government and retail sectors.

* U.S. consumer sentiment weakened to a 3-1/2-year low in early November amid worries about the economic fallout from the longest ever U.S. government shutdown, a survey showed on Friday.

* Traders are pricing in a roughly 64% probability that the U.S. central bank will cut rates by 25 basis points next month, according to CME Group's FedWatch tool.

* Fed Governor Stephen Miran said on Monday a 50-bps rate cut would be appropriate for December, noting that inflation is falling while the unemployment rate is drifting higher.

* Non-yielding gold tends to do well in a low-interest-rate environment and during economic uncertainties.

* The U.S. Senate on Sunday moved forward on a measure aimed at reopening the federal government and ending a now 40-day shutdown that has sidelined federal workers, delayed food aid and snarled air travel.

* If the Senate passes the bill, which would fund the government until January 30 and include a package of three full-year appropriations bills, it must then be approved by the House of Representatives and sent to President Donald Trump, a process that could take several days.

* China's gold consumption in the first three quarters of 2025 declined at a slower pace than the preceding year, as strong safe-haven interest continued to support investment demand despite high prices weighing on jewellery buying.

* Elsewhere, spot silver firmed 0.2% to $50.66 per ounce, platinum rose 0.3% to $1,582.60 and palladium added 0.8% to $1,425.71.

DATA/EVENTS (GMT)

0700 UK Claimant Court Unem Chng Oct

0700 UK ILO Unemployment Rate Sep

0700 UK HMRC Payrolls Change Oct

1000 Germany ZEW Economic Sentiment Nov

1000 Germany ZEW Current Conditions Nov.

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