Gold prices surged nearly 3% on Monday, reaching their highest level in over two weeks. The rally followed disappointing U.S. economic data, which strengthened expectations for Federal Reserve interest rate reductions.
Spot gold reached $4,111.39 per ounce, marking its strongest position since October 24. US gold futures mirrored this movement, settling at $4,122.00 per ounce with identical gains. Recent employment figures revealed unexpected job losses across the government and retail sectors during October. Additional data showed a decline in consumer sentiment as households expressed growing economic concerns.
These indicators have significantly altered market expectations regarding Federal Reserve policy. Peter Grant, vice president and senior metals strategist at Zaner Metals, confirmed the shifting outlook. “Some weak data last week has the market tilting a little more dovish in their Fed expectations,” Grant stated. “We could very much still see a December rate cut.”
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Current market pricing reflects growing conviction in imminent Federal Reserve action. The CME Group’s FedWatch tool indicates a 64% probability of a rate reduction in December. These odds increase to approximately 77% by January. Gold typically performs well in low-interest-rate environments, as it doesn’t offer a yield, making it more attractive when rates decline.
Analysts maintain optimistic projections for gold’s continued performance. Grant suggested the metal could reach between $4,200 and $4,300 per ounce by year-end. He further identified $5,000 per ounce as a reasonable objective for the first quarter of next year. These projections depend heavily on continued economic softness and corresponding Federal Reserve policy responses.