Gold Holds Steady as Weak U.S. Data Strengthens Expectations of a December Fed Rate Cut

Gold prices held largely steady on Tuesday after weaker-than-expected U.S. retail sales strengthened traders’ confidence that the Federal Reserve is likely to cut interest rates in December.

Spot gold slipped 0.2% to $4,130.85 per ounce by 9:36 a.m. ET (1436 GMT). Earlier in the day, prices touched their highest level since November 14, extending Monday’s nearly 2% surge after several Fed officials signaled support for a third rate cut this year.

U.S. gold futures for December delivery rose 0.8% to $4,127.40.

“Based on the Fed’s recent dovish tone, expectations for a December rate cut have resurfaced, and today’s data doesn’t seem to change that,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.

Retail sales rose less than expected in September, easing after a recent strong run. Separately, data showed the U.S. Producer Price Index increased 2.7% in the 12 months through September, matching August’s gain. The report had been delayed due to the government’s 43-day shutdown.

According to CME data, traders now see an 85% chance of a December rate cut—up sharply from 30% a week ago—and a 64% chance of additional easing in January.

Federal Reserve Governor Stephen Miran said Tuesday that a weakening job market warrants further rate cuts, echoing dovish remarks made Monday by Governor Christopher Waller.

Gold, which offers no yield, tends to perform well in lower-rate environments and during periods of geopolitical or economic uncertainty.

“Broadly speaking, ongoing economic uncertainty, geopolitical tensions, and expectations of a dovish Fed remain supportive factors for gold in the near term,” said ActivTrades analyst Ricardo Evangelista.

Elsewhere in precious metals, spot silver rose 0.1% to $51.41 per ounce, platinum gained 0.3% to $1,548.80, while palladium edged 0.2% lower to $1,392.79.