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Gold prices edged lower in Asian trading on Monday, pressured by a broad improvement in risk appetite as markets sharply increased their expectations for a U.S. Federal Reserve interest rate cut in December.
A rebound in equities and other risk-sensitive assets drew investors away from safe havens, while reports of progress toward a potential Russia-Ukraine ceasefire further reduced demand for gold. Even so, persistent concerns surrounding global fiscal stability, alongside rising diplomatic tensions between China and Japan, helped keep bullion firmly above the $4,000 level.
Spot gold slipped 0.3% to $4,052.53 per ounce, while December gold futures fell 0.7% to $4,086.10 by 01:07 ET (06:07 GMT).
Gold Under Pressure as Markets Double Down on December Rate-Cut Outlook
Investor sentiment shifted notably after comments from New York Fed Governor John Williams, who signaled that the central bank still had justification for easing policy in December. Williams highlighted emerging risks to the labor market while noting a moderation in inflation pressures.
Markets responded swiftly. According to CME’s FedWatch tool, traders priced in a 67.3% probability of a 25-basis-point cut at the Fed’s December 9–10 meeting—up from just 39.8% a week earlier.
The renewed conviction in a near-term rate cut boosted demand for equities and high-yielding assets at the expense of safe-haven metals. Still, expectations of lower borrowing costs also helped limit gold’s downside, given that reduced interest rates typically enhance the metal’s appeal by lowering the opportunity cost of holding it.
Other precious metals were mixed. Spot platinum gained 1.4% to $1,537.65 per ounce, while spot silver dipped slightly to $49.92385 per ounce.
Markets Brace for Heavy Week of U.S. Economic Data
Investors are now closely watching a packed schedule of key U.S. economic releases for September—figures that were delayed due to the extended government shutdown and are expected to provide critical insights into the health of the world’s largest economy.
Later on Monday, markets will receive industrial production and capacity utilization numbers. Tuesday brings producer price index (PPI) data and retail sales figures, offering a fresh look at inflation and consumer strength.
Wednesday will be the busiest day, with releases including building permits, durable goods orders, weekly jobless claims, and the highly anticipated third-quarter GDP print. Also due Wednesday is the Personal Consumption Expenditures (PCE) price index—the Fed’s preferred inflation gauge.
Despite this influx of September data, the absence of up-to-date October figures means the Fed is still operating with limited visibility heading into its final meeting of the year. Policymakers have appeared increasingly divided in recent weeks over whether further rate cuts are warranted in 2024, contributing to earlier expectations of a pause.
For now, gold remains supported by global uncertainties and the likelihood of easier monetary policy—but stronger risk appetite continues to cap its upside.
