Spot Gold continued holding near a six-week peak of $4,264.70/oz. on Thursday, after weak US private payrolls data added to expectations of an interest rate cut by the Federal Reserve this month.
Employers in the US private sector cut 32,000 jobs in November, which has been the largest drop in payrolls since March 2023. The ADP figures heightened concerns over a cooling US labor market.
The data also aligned with dovish remarks by Fed officials. 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.
And, 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.
“The Fed is still likely to accompany a further cut next week with more hawkish messaging about the prospect for future loosening,” Stephen Brown of Capital Economics stated.
Markets are now pricing in about an 89% chance of a 25 basis point Fed rate cut in December, compared to an 83% 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.
Spot Gold was last down 0.26% on the day to trade at $4,192.01 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.
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