Spot Gold held within striking distance of a six-week peak of $4,264.70/oz. on Wednesday, underpinned by rising expectations of an interest rate cut by the Federal Reserve this month.
Recent macro data showed the US manufacturing sector activity had shrunk for the ninth straight month in November, which added to expectations of further monetary easing.
Fed Governor Christopher Waller said last week that the US job market was weak enough to warrant another 25 basis point rate cut in December.
Also, New York Fed President John Williams said that a near-term rate cut remained possible, with labor market weakness posing a higher risk than elevated inflation.
And, Kevin Hassett, seen as a frontrunner to succeed Jerome Powell, has echoed US President Trump’s support for rate cuts.
Markets are now pricing in about an 87.5% chance of a 25 basis point Fed rate cut in December, compared to an 84% chance a week earlier.
Markets are also pricing in three additional rate cuts by the end of 2026.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
Investor focus now sets on the November ADP employment figures due out later today and the delayed September PCE data on Friday for more clues on the Federal Reserve’s policy path.
Spot Gold was last little changed on the day to trade at $4,206.31 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Its current all-time high stands at $4,381.21/oz.
Gold looked set to register its best annual performance since 1979, being up 60.28% YTD.
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