Gold gained as traders bet that the Federal Reserve will deliver an interest-rate cut next month amid signs of a weak labor market.
Federal Reserve Gov. Christopher Waller fueled optimism Monday after indicating support for a rate cut next month. New York Fed President John Williams had a similar effect on the market Friday after he said a near-term cut remains a possibility.
Although the central bank’s December meeting is the next big milestone for markets, investors are relying on dated economic data due to delays caused by the U.S. government shutdown.
Swap traders now see a nearly 80% chance of a rate cut at the Fed’s policy meeting Dec. 9 and 10. Policymakers appear deeply divided over whether another reduction will be appropriate after cuts in September and October. Bullion typically benefits in a lower-rate environment as it pays no interest.
Traders will be watching a slew of dated economic data slated to be released this week. They include September retail sales and producer-price data due out Tuesday as well as jobless claims Wednesday.
September retail figures are expected to show a moderation as consumers remain squeezed by high prices. Jobless claims covering the November survey week will take on added importance as the Fed leans on alternative indicators in the absence of payroll figures.
The rate-cut path “is rather hard to predict and a close call, hence gold will likely stay clustering around the current level,” said Ahmad Assiri, a strategist at Pepperstone Group Ltd. “I don’t see an imminent big move in gold, rather a perfect setup for two-way trades in a less volatile environment.”
The precious metal has been in a consolidation phase since surging to a record high above $4,380 an ounce in October. It’s still up about 56% this year, supported by heightened trade and geopolitical uncertainty, as well as concerns over deteriorating fiscal outlooks for many governments.
Spot gold gained 1.7% to $4,134.48 an ounce as of 4:59 p.m. in New York. The Bloomberg Dollar Spot Index was steady. Silver, platinum and palladium all advanced.
On the London Metal Exchange, copper futures settled little changed at $10,773 a metric ton, while most other base metals nudged higher.
Li writes for Bloomberg. Preeti Soni, Jack Ryan and Yihui Xie of Bloomberg contributed to this report.