Gold Prices Climb 0.3% as Markets Price in December Fed Rate Cut

TLDR

• Gold climbed 0.3% to $4,209.43 per ounce on Monday as the dollar fell to five-week lows
• Traders see 87% chance of Fed rate cut at December 9-10 meeting following weak economic data
• Private payrolls dropped sharply in November while consumer spending slowed in September
• Silver reached record high of $59.32 per ounce on Friday, doubling in value this year
• UBS projects gold could hit $4,500 per ounce in 2026 if Fed continues rate cuts

Gold prices moved higher on Monday as the U.S. dollar weakened and investors prepared for a Federal Reserve interest rate decision this week. Spot gold rose 0.3% to $4,209.43 per ounce by morning trading.

The dollar index fell near one-month lows reached on December 4. A weaker dollar makes gold less expensive for buyers using other currencies.

December gold futures declined 0.1% to $4,239.40 per ounce. The difference between spot and futures prices showed mixed investor sentiment.

UBS analyst Giovanni Staunovo said gold is gaining from dollar weakness and Fed rate cut expectations. Market participants believe the central bank will reduce rates at its policy meeting this week.

Economic Data Fuels Rate Cut Expectations

Recent economic reports showed slowing U.S. growth momentum. Consumer spending increased moderately in September as rising costs and labor market weakness affected households.

Private payrolls recorded their largest drop in over two-and-a-half years during November. The core Personal Consumption Expenditures index, which the Fed uses to measure inflation, posted a small monthly gain.

According to CME’s FedWatch tool, markets are pricing in an 87% probability of a 25-basis-point rate cut. The Fed will announce its decision after its December 9-10 policy meeting.

Lower interest rates reduce the opportunity cost of holding gold. The non-yielding metal becomes more attractive when interest-bearing investments offer smaller returns.

Chair Jerome Powell’s press conference following the meeting will provide guidance on future policy moves. Investors will watch for signals about additional rate cuts in 2026.

Some Fed officials have cautioned against cutting rates too quickly. This disagreement among policymakers has created uncertainty about the pace of future easing.

U.S. Treasury yields ticked higher in recent sessions. Rising yields offset some of the support gold received from the weaker dollar.

Silver Hits Record as Precious Metals Rally

Silver gained 0.3% to $58.43 per ounce on Monday. The white metal reached a record high of $59.32 per ounce on Friday.

Silver prices have doubled this year due to supply shortages and its classification as a critical mineral. Industrial demand expectations have helped silver outperform gold in recent weeks.

Staunovo noted that monetary and fiscal stimulus measures should boost industrial consumption. Silver benefits from both investment demand and industrial use.

Platinum rose 0.6% to $1,650.90 per ounce. Palladium increased 1% to $1,471.26 per ounce.

Copper futures on the London Metal Exchange edged up 0.3% to $11,681.20 per ton. U.S. copper futures fell 0.7% to $4.67 per pound.

Staunovo projects gold could reach $4,500 per ounce next year. His forecast assumes the Federal Reserve will implement multiple rate cuts throughout 2026.

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Source: https://blockonomi.com/gold-prices-climb-0-3-as-markets-price-in-december-fed-rate-cut/