FX.co ★ Gold Rises on Fed Rate Cut Bets

Gold surged to approximately $4,150 per ounce on Wednesday, nearing a high not seen in almost two weeks. This uptick followed the publication of delayed economic reports, which strengthened the likelihood of a Federal Reserve rate cut in December. Recent data indicate a deceleration in consumer activity, with retail sales climbing merely 0.2% in September compared to a more robust increase in August, reflecting weaker spending. At the same time, producer price data demonstrated that inflationary pressures were largely consistent with expectations. In light of this, several Federal Reserve officials have expressed support for a rate reduction next month, citing labor market weaknesses. Consequently, market participants are now estimating an over 80% probability of a 25 basis points cut, a significant rise from the 50% chance reported the previous week. Meanwhile, further gains are being moderated by indications of reduced geopolitical tensions, as Ukrainian leaders have consented to a plan to conclude the conflict with Russia, thereby diminishing the appeal for safe-haven assets.