During Asian market hours on Monday morning, gold (XAU/USD) continued to rise, hovering around $4,230. The metal’s been riding a wave of speculation that the Federal Reserve will start cutting interest rates in December. Everyone’s got their eyes on the US ISM Manufacturing PMI report next, since that could shake up both the US Dollar and Gold in the short run.
Fed Rate Cut Hopes Push Gold Higher
Lately, the odds of a December rate cut have shot up. Weak economic data out of the US, plus some dovish talk from Fed officials, has traders piling into bets that the Fed’s about to pivot. The CME FedWatch Tool now shows an 87% chance of a 25 basis point cut at the December 9–10 meeting—that’s a big jump from just a week ago. Lower rates usually make Gold more attractive, since it doesn’t pay interest, so this just adds more fuel to Gold’s recent surge.
The ISM Manufacturing PMI is expected to dip a bit to 48.6 for November. If the report surprises to the upside, though, the Dollar could bounce and Gold might take a breather, since they usually move in opposite directions.
Geopolitics Could Cap Gold’s Gains
It’s not all smooth sailing for Gold. Hopes for a breakthrough in Ukraine peace talks have taken some of the shine off Gold’s safe-haven appeal. Reports say recent discussions between US and Ukrainian officials went really well, and the US special envoy is even planning a trip to Moscow soon. If tensions keep cooling, some of Gold’s appeal fades, which could keep prices from running much higher—even if the Fed does start cutting rates.
