- Gold futures remain in the positive zone, following weaker US data.
- The rising Fed rate cut speculations lift the gold demand, pressuring Treasury yields.
- Improved risk sentiment and reduced China’s physical demand could cap gains in the medium term.
Gold futures are poised to extend their upward trajectory as markets lean aggressively into expectations for a Fed rate cut in December. Moreover, softer US economic data, such as sluggish Retail Sales, a cooling Producer Price Index, and weakening Consumer Confidence, have reinforced the view that the Fed has room to ease without threatening the inflation target.
The shift has pulled the US dollar back to one-week lows, while Treasury yields are slipping to monthly troughs, creating a supportive environment for gold futures, given its non-yielding nature.
Meanwhile, dovish commentary from key Fed policymakers adds more to the gold’s bullish momentum. NY Fed President John Williams suggested that rates could fall without risking an inflation overshoot. At the same time, Christopher Waller endorsed another 25-basis-point rate cut in December, and Stephen Mihaylo called for a deeper adjustment to bring the policy back to neutral. Futures markets now price in an 80% probability of a rate cut in the next meeting, with expectations of more easing in 2026. As long as these expectations hold, gold is expected to find buyers on dips.
Improved global risk sentiment, driven by optimism over Russia-Ukraine peace talks, has reduced safe-haven flows, but the pressure is not enough to derail gold’s macro-driven bid. On the other hand, China, the major gold buyer, saw a 64% drop in October in its physical demand via Hong Kong. This development could cap the medium-term upside, but traders are primarily focused on the US policy outlook rather than physical flows.
In the near term, the gold futures will seek direction from the US data releases. Today’s major events include:
- Durable Goods Orders
- Weekly Jobless Claims
- Chicago PMI
These data releases could reinforce or temper Fed expectations for a December rate cut. Moreover, fresh commentary from Fed officials also matters as market participants will be looking for validation of the easing cycle.