Global spot gold prices saw a significant increase at the close of trading on 24/11, rising by 70 USD to reach 4.134 USD an ounce. The upward trend continued into the morning session of 25/11, with prices at one point touching 4.143 USD.
This market rally stemmed from investor expectations regarding a potential interest rate reduction by the United States Federal Reserve (Fed) next month. Investors are closely monitoring US economic data for further indications of the Fed's monetary policy direction. Bart Melek, commodity strategy director at TD Securities, noted, "The market is increasingly confident that the Fed will cut interest rates in december".
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Global gold prices rose sharply during the 24/11 session. Chart: Kitco |
Further fueling these expectations, New York Fed President John Williams stated last week that US interest rates could decrease "in the near term" without jeopardizing the Fed's inflation target. Such a rate cut, he suggested, would help stem the weakening trend in the labor market. The CME FedWatch Tool indicates that investors are currently pricing in a 79% probability of a rate cut next month, reflecting strong market sentiment. Gold tends to perform well in environments characterized by low interest rates and economic-political instability.
"We are awaiting further data. The current expectation is that they will weaken. Inflation may not accelerate. All these factors are beneficial for gold", Melek explained. This week, investors anticipate the release of economic data previously delayed due to the US government shutdown, including key figures on retail sales, jobless claims, and manufacturing activity.
Adding to market considerations, the United States and Ukraine are continuing discussions this week on a plan to end the Russia-Ukraine conflict. Previously, both sides agreed to revise a US proposal that many observers believed was more favorable to Russia.
Rhona O'Connell, an analyst at StoneX, offered a cautious outlook, stating, "With the Fed's monetary policies and geopolitical volatility still in focus, gold could benefit. However, we anticipate prices will only fluctuate within the 4.000 - 4.100 USD range".
Beyond gold, other precious metals also saw price increases at the start of the week. Silver climbed 1,7% to 50,8 USD an ounce. Platinum rose 2,3% to 1.545 USD. Palladium increased 1,7%, closing the session at 1.398 USD.
Ha Thu (according to Reuters)
