Key Points
- Gold prices stabilized near $4,130 after a 2% rally. Comments from Fed officials fueled hopes for a December rate cut.
- A six-week government shutdown delayed crucial economic data.
- Gold is up 55% this year, aiming for its best result since 1979.
- Traders see a 75% chance of a rate cut next month.
Gold prices paused their climb on Tuesday, stabilizing near $4,130 an ounce. This follows a sharp 2% jump on Monday, sparked by a growing belief that the U.S. Federal Reserve is ready to lower interest rates in December.
The sudden optimism comes from Federal Reserve Governor Christopher Waller. He recently argued for a rate cut, citing a softening U.S. labor market. Since gold does not pay interest to its owners, it usually becomes more attractive to investors when official rates decline.
New York Fed President John Williams added fuel to the fire on Friday, suggesting a near-term rate reduction is likely. Traders now see a roughly 75% chance of a cut happening at the year’s final meeting.
Navigating the market has been tricky recently. A historic six-week U.S. government shutdown delayed the release of crucial economic data. Without these hard numbers, investors are hanging on every word from central bank officials to guess the economy’s direction. Luca Bindelli, an investment strategist at Banque Lombard Odier & Cie, noted that the market is currently making “sharp turns” based purely on this “chatter.”
Traders are now waiting for a data dump this week to verify the Fed’s stance. Delayed reports on retail sales and producer prices drop on Tuesday, followed by jobless claims on Wednesday. This information will be vital before Fed officials enter a mandatory quiet period starting November 29.
Despite a recent dip from its all-time high of over $4,380, gold is having a historic year. The metal has surged roughly 55% in 2025, putting it on track for its best annual performance since 1979. Heavy buying by central banks and strong interest in exchange-traded funds continue to prop up the price. As of Tuesday morning in London, gold remained flat, while silver dipped slightly and palladium inched higher.
