Gold Soars, Is the Fed Ready to Cut Interest Rates?
Gold prices rose to a nearly two-week high on Wednesday, supported by US economic data that reinforced expectations of a Fed rate cut in December and weighed on the US dollar. Spot gold prices rose 0.8% to around US$4,161.10 per troy ounce, the highest since November 14, while US gold futures for December delivery fell slightly by 0.5% to around US$4,159 per troy ounce.
Data released Tuesday showed US retail sales in September rose less than expected. In the 12 months to September, the Producer Price Index (PPI) rose 2.7%, the same as in August. This weaker-than-expected data follows a series of dovish comments from Fed officials, further strengthening the market's confidence that the central bank will soon ease policy.
Pressure on the dollar also supported gold's gains. The dollar index briefly touched a one-week low as investors bet the front-runner for the next Fed Chair would implement a looser policy stance. The yield on the 10-year US Treasury bond also held near a one-month low, reducing the appeal of interest-bearing assets and making non-yielding gold relatively more attractive.
According to the CME FedWatch tool, the market now prices about an 84% chance of a Fed rate cut in December, up from about 50% a week earlier. Meanwhile, US Treasury Secretary Scott Bessent assessed that the Fed's current interest rate management system is "struggling" and needs to be streamlined. The market is also awaiting the release of US weekly jobless claims, due later on Wednesday evening, for further confirmation of policy direction.
Outside of gold, other precious metals were mixed. Spot silver rose about 1% to US$51.87 per troy ounce, while platinum edged down 0.2% to around US$1,550.40, and palladium fell 0.5% to around US$1,390.66. On the physical demand side, China's net gold imports via Hong Kong actually fell by around 64% in October compared to September, indicating that the world's largest consumer is temporarily slowing down purchases after the recent price rally. (asd)
Source: Newsmaker.id
