Gold Rises Driven by Expectations of U.S. Interest Rate Cuts

SadaNews Economy - Gold regained some of its momentum on Wednesday, as investors held on to expectations of interest rate cuts from the Federal Reserve, while markets await a series of U.S. data this week to determine the course of monetary policy, as silver surged to a new record high.

Gold rose in spot trading by 0.1% to $4,212.50 an ounce, after dropping more than 1% in the previous session. U.S. gold futures for December delivery jumped 0.7% to $4,250.80 an ounce.

Brian Lan, Managing Director of Gold Silver Central, stated, "The profit-taking seen in gold recently, alongside the shift toward cryptocurrencies or stocks, is natural, and we expect to see a strong comeback, especially with the rising chances of interest rate cuts as the year draws to a close."

According to the CME's FedWatch tool, U.S. interest rate futures currently price in an 89% probability of a rate cut next week, up from 85% a week ago.

Recent U.S. economic data, which revealed a slight slowdown in growth, has enhanced expectations for a Fed rate cut during its meeting on December 9-10, while major brokerage houses also expect the beginning of a monetary easing cycle.

Gold, which does not yield returns, typically performs well in low-interest environments.

Investors are also focusing on a set of key data expected this week, including the ADP private sector jobs report for November to be released today, in addition to the personal consumption expenditures index for September – the Fed's preferred measure of inflation – scheduled for Friday.

Meanwhile, U.S. President Donald Trump said on Tuesday that he intends to announce his choice to succeed Jerome Powell as head of the Federal Reserve at the beginning of next year.

Data from the World Gold Council showed that central banks purchased 53 tons of gold in October, an increase of 36% month-on-month, marking the largest net monthly demand since the beginning of 2025.

The white metal recorded a rise of 0.4% to $58.73 an ounce after touching a new record high of $58.94 earlier in the session.

Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, said, "Silver is rising due to actual supply shortages, as we are witnessing a decline in inventories on the COMEX and in China. Therefore, we believe the fundamentals for silver look very strong."