Gold prices steady, with data deluge to inform rate cut bets

Investing.com-- Gold prices steadied Monday ahead of barrage of economic data this week, as traders speculated on a December interest rate cut by the U.S. Federal Reserve. 

At 08:10 E (13:10 GMT), Spot gold gained 0.3% to $4,077.75/oz, while gold futures for December fell 0.1% to $4,113.50/oz. 

A recovery in equities and other risk-driven markets has weighed on demand for gold, as did more reports that the U.S. was working on a Russia-Ukraine ceasefire. 

But lingering concerns over global fiscal health and a China-Japan diplomatic spat kept the yellow metal above $4,000 an ounce. Anticipation of a barrage of key U.S. economic readings this week also limited gold’s losses, as did the prospect of lower rates in the near-term. 

Gold lags as Dec rate cut bets boost risk 

Markets sharply dialed up their expectations for a December interest rate cut after New York Fed Governor John Williams said on Friday that the central bank still had reason to trim next month.

Williams cited potential risks to the labor market, while also noting that upside risks for inflation had eased. 

Traders were pricing in a 67.3% chance for a 25 basis point cut during the Fed’s December 9-10 meeting, a sharp reversal from the 39.8% chance seen last week, CME Fedwatch showed. 

Other precious metals advanced on Monday, while gold’s losses were also limited by the renewed prospect of U.S. rates falling in the near-term. Spot platinum rose 1.7% to $1,550.45/oz and spot silver gained slightly to $49.925/oz. 

U.S. economic data barrage 

The focus this week is squarely on a host of long-delayed economic prints for September, which are set to offer more cues on the world’s largest economy. 

Industrial production and capacity utilization data are due later on Monday, followed by producer price index and retail sales prints on Tuesday. 

Prints on building permits, durable goods, jobless claims, and most importantly, third-quarter gross domestic product data are due on Wednesday. 

PCE price index data, the Fed’s preferred inflation gauge, is also due on Wednesday. 

The prints, which were delayed by a prolonged government shutdown, are expected to offer some insight into the U.S. economy going into December. But a lack of clear data for October is still expected to leave the Fed flying largely blind into its final meeting for the year. 

The central bank was seen turning increasingly divided over whether to cut rates further this year, driving initial expectations for a hold. 

Gold could reach $5,000/oz next year - BofA 

Despite the recent retreat, Bank of America still expects gold to extend its record-breaking momentum into 2026, arguing that the macro environment that lifted the metal through 2025 remains firmly intact.

In its ’Year Ahead’ outlook, the bank says gold has climbed through a series of all-time highs and is technically “overbought,” yet still “underinvested,” a combination that keeps the market supported despite stretched valuations.

Strategists led by Michael Widmer point to the policies that helped propel bullion higher this year, noting that “many of the macro drivers – including the unorthodox U.S. economic policies that pushed the yellow metal higher – remain supportive.”

As long as those forces stay in place, BofA sees a credible pathway for gold to reach $5,000 an ounce in 2026, although a hawkish shift by the Federal Reserve remains the key downside risk.

Ambar Warrick contributed to this article