Gold price rises to near two-week high as Fed rate cut expectations rise

Gold prices climbed to their highest in nearly two weeks on Wednesday, boosted by US economic data that strengthened expectations of a Federal Reserve interest rate cut in December.

Spot gold rose 0.8 percent to $4,161.10 per ounce as of 0241 GMT, marking the highest level since November 14. In contrast, US gold futures for December delivery slipped 0.5 percent to $4,159 per ounce.

Tim Waterer, Chief Market Analyst at KCM Trade, said, “Expectations are now leaning towards a December rate cut. This has been supported by dovish comments from Fed officials and benign economic data, which are boosting gold from a yield perspective.”

Data released on Tuesday showed US retail sales for September rose less than anticipated, while the Producer Price Index for the year through September increased 2.7 percent, matching August’s figure. These figures, coupled with recent dovish remarks from Fed policymakers, strengthened investor confidence in lower rates.

The US dollar fell to a one-week low as traders speculated that the likely candidate for the next Fed chair could adopt a more dovish stance. This made gold, priced in dollars, cheaper for buyers holding other currencies. Meanwhile, the benchmark 10-year Treasury yields remained near one-month lows.

US Treasury Secretary Scott Bessent added on Tuesday that the Fed’s system for managing interest rates is struggling and needs simplification.

Market indicators now suggest an 84 percent chance of a December rate cut, up from 50 percent last week, according to the CME FedWatch tool. Gold typically performs well in low-interest-rate environments, given it does not yield interest.

The US weekly jobless claims report is expected later on Wednesday.

In other metals, spot silver gained 1 percent to $51.87 per ounce, platinum fell 0.2 percent to $1,550.40, and palladium declined 0.5 percent to $1,390.66.

Gold price in Pakistan

Local gold prices also surged on Tuesday. According to the All Pakistan Sarafa Gems and Jewellers Association, the price of 24-karat gold per tola rose by Rs7,700 to Rs436,562, while 10 grams of 24-karat gold increased by Rs6,601 to Rs374,281. Ten grams of 22-karat gold rose by Rs6,051 to Rs343,103.

Internationally, gold gained US$77, reaching US$4,142 per ounce on November 25. Silver prices in Pakistan rose as well, with per tola rates increasing by Rs152 to Rs5,422 and 10 grams climbing by Rs130 to Rs4,648. International silver prices went up US$1.52 to $51.50 per ounce.