Gold Advances as Traders Bet on December Rate Cut, Await US Data

Gold advanced as traders bet that the Federal Reserve will deliver an interest-rate cut next month amid signs of a weak labor market.

Federal Reserve Governor Christopher Waller fueled optimism on Monday after indicating support for an interest-rate cut next month. New York Fed President John Williams had a similar impact on the market on Friday after he said a near-term rate cut remains a possibility. While the central bank’s December meeting is the next big milestone for markets, investors are relying on dated economic data due to delays caused by the US shutdown.

Swap traders now see a 70% chance of a rate cut at the Fed’s upcoming Dec. 9-10 policy meeting. Policymakers appear deeply divided over whether another reduction will be appropriate following cuts in September and October.

Bullion typically benefits in a lower rate environment as it pays no interest.

Traders will be watching a slew of dated economic data slated to be released this week. They include September retail sales and producer-price data due Tuesday as well as jobless claims on Wednesday.

September retail figures are expected to show a moderation as consumers remain squeezed by high prices. Jobless claims covering the November survey week will take on added importance as the Fed leans on alternative indicators in the absence of payroll figures.

The rate-cut path “is rather hard to predict and a close call, hence gold will likely stay clustering around the current level,” said Ahmad Assiri, a strategist at Pepperstone Group Ltd. “I don’t see an imminent big move in gold, rather a perfect setup for two-way trades in a less volatile environment.”

The precious metal has been in a consolidation phase since surging to a record high above $4,380 an ounce in October. It’s still up around 54% this year, supported by heightened trade and geopolitical uncertainty, as well as concerns over deteriorating fiscal outlooks for many governments.

Spot gold gained 0.8% to $4,097.65 an ounce as of 11:57 a.m. in New York. The Bloomberg Dollar Spot Index was steady. Silver, platinum and palladium all advanced.

On the London Metal Exchange, copper futures were little changed, while most other base metals nudged higher.