Gold Rises Above $4,200 on Fed Rate-Cut Expectations
By Praisebell Rosemond Larbi
Gold prices climbed on Monday, reaching $4,212.70 per ounce, as investors positioned themselves ahead of the US Federal Reserve’s final policy meeting of the year. Expectations that the Fed will cut interest rates this week provided strong support for the safe-haven metal, as lower borrowing costs typically increase gold’s appeal.
The precious metal has been steadily advancing, up 0.33% from Friday, 2.35% over the past month, and an impressive 58% compared to this time last year, reflecting sustained demand amid a cautious global economic outlook.
Mixed U.S. economic data have bolstered expectations for a rate cut. Recent job numbers were uneven, and inflation came in largely as forecast, suggesting that the U.S. economy may be slowing sufficiently for the Fed to ease monetary policy. Markets currently assign an 88% probability that the Fed will reduce rates by 0.25 percentage points, bringing borrowing costs to between 3.75% and 4.0%. Analysts also anticipate two additional cuts next year, which is helping sustain upward momentum in gold prices. Investors are closely monitoring Tuesday’s JOLTS job openings report, the last major labor-market release before the Fed’s policy decision, for further signals about future rate moves.
Meanwhile, global central banks continue to underpin gold demand. China has increased its gold reserves for the 13th consecutive month, now holding about 74.12 million troy ounces, demonstrating continued appetite from one of the world’s largest buyers. This persistent accumulation supports prices and highlights gold’s enduring role as a strategic reserve asset.
Market analysts say gold’s strong start to the week reflects a combination of rising investor caution, expectations of lower U.S. interest rates, and steady purchases by major central banks. The metal’s performance underscores its continued status as a hedge against economic uncertainty, currency volatility, and potential shifts in monetary policy. Looking ahead, traders are expected to remain attentive to developments in U.S. monetary policy, global economic indicators, and central bank buying trends, all of which are likely to influence gold’s trajectory in the near term.
