Sharp rise in Fed rate-cut expectations pushes gold prices higher
Istanbul, Dec 2 (Hibya) – According to precious metals analysts, the sharp increase in expectations that the U.S. Federal Reserve (Fed) may cut interest rates is driving gold prices higher, while silver continues to hold last week’s all-time high as strong investor demand further tightens the already limited physical supply.
Analysts noted in their latest update that despite mixed economic data, expectations of a U.S. rate cut at the Fed’s December meeting have risen:
“Neither employment, inflation, nor other economic indicators appear to be worsening in a way that clearly signals a need for a rate cut, yet consumer confidence dropped sharply in November. Two weeks ago, the probability of a rate cut at the Fed’s December 10 meeting had fallen to 30%. Last week, as some Fed members began discussing the possibility of cuts, market expectations favoring a rate reduction rose above 80%.”
Analysts added: “Since the top of the Fed’s rate range is about 50 basis points above the 2-year U.S. Treasury yield, there is some room for a cut, though not as wide as in October, when the gap was around 75 basis points.” They also recalled that gold, which met resistance at the beginning of November, rose above $4,200 last week.
Gold prices continue to trade within the high range set late last week and remain above $4,200 per ounce.
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