Gold prices remained steady on Tuesday, with the latest U.S. retail sales figures adding weight to market expectations that the Federal Reserve may cut interest rates at its December meeting.
Spot gold was unchanged at US$4,139.79 per ounce, after earlier touching its highest level since mid-November. The metal gained nearly 2% on Monday following comments from U.S. policymakers signalling support for a third rate cut this year at the upcoming December 9-10 Federal Reserve meeting. U.S. gold futures settled 1.1% higher at US$4,140 per ounce.
Market sentiment has clearly shifted in favour of easing. Softer-than-expected U.S. retail sales for September reinforced the belief that economic momentum may be slowing. Meanwhile, annual Producer Price Index data showed a 2.7% increase, unchanged from the previous month, suggesting inflation pressures are not escalating.
As a result, traders are now pricing in an 85% probability of a December rate cut, sharply higher from 50% just a week ago. Markets also see a solid chance of a second cut in January. Fed Governor Stephen Miran reinforced this view, pointing to weakening labour market conditions as justification for additional policy easing—echoing similar sentiments from Governor Christopher Waller a day earlier.
Lower interest rates tend to benefit gold, which carries no yield but becomes more attractive when borrowing costs fall. The combination of economic uncertainty, geopolitical tension, and a dovish Federal Reserve stance continues to create a supportive environment for the yellow metal in the near term.
In other precious metals:
Silver slipped 0.3% to US$51.21 per ounce
Platinum rose 0.2% to US$1,546.42
Palladium gained 0.1% to US$1,397.49
FirstGold will continue monitoring developments as investors look ahead to the crucial December meeting that may set the tone for gold prices into 2025.
Disclaimer: This analysis is for educational purposes only. It does not constitute financial advice. Precious metals prices can be volatile, and investors should perform their own research and seek professional guidance before making investment decisions. Past performance is not a guarantee of future results.
