Gold prices climbed over 1% on Monday, supported by increasing market confidence that the U.S. Federal Reserve is on course to cut interest rates next month. With fresh economic data due this week, investors are closely watching for further signals on the Fed’s monetary policy direction.
Spot gold rose 1.2% to $4,111.86 per ounce by 01:43 p.m. EST, while U.S. gold futures for December delivery settled 0.4% higher at $4,094.20 per ounce.
According to Bart Melek, Head of Commodity Strategies at TD Securities, market sentiment is shifting firmly towards expectations of a December rate reduction. Comments from New York Federal Reserve President John Williams added support to this view, suggesting that interest rates could fall “in the near term” without jeopardising inflation targets while offering protection to the labour market.
Market positioning reflects this optimism, with the probability of a December rate cut standing at 79%, based on CME FedWatch data.
Gold traditionally benefits in low-interest-rate environments, particularly during periods of economic uncertainty or global tension. Melek noted that expectations of softer economic data and muted inflation may further support the precious metal in the short term.
Investors are now awaiting several key indicators delayed by the recent U.S. government shutdown, including retail sales, jobless claims and producer price data due later this week.
On the geopolitical front, the United States and Ukraine continued discussions aimed at reaching a revised proposal acceptable to both sides to bring an end to the conflict with Russia.
Analyst Rhona O’Connell of StoneX commented that while gold is likely to draw ongoing support amid the current macro backdrop, the metal remains range-bound, with trading likely to stay between $4,000 and $4,100 per ounce for now.
Other precious metals also saw gains, with spot silver up 1.7% at $50.84 per ounce, platinum rising 2.3% to $1,545.91, and palladium advancing 1.7% to $1,398.21.
