Gold Trading Alert: Fed Rate Cut Expectations Continue to Rise, Is a New Bull Market On the Way?
2025-11-26 07:38:40
On Wednesday (November 26) in early Asian trading, spot gold traded in a narrow range, currently hovering around $4133 per ounce. Gold prices held steady around $4130 per ounce on Tuesday, despite being influenced by weak US economic data and rising expectations of a Federal Reserve rate cut. While it briefly touched a high of $4159.15 on Tuesday, the overall trend was stable, failing to break through further. Trading was limited due to the upcoming US Thanksgiving holiday. Of course, weaker-than-expected retail sales data, persistent inflationary pressures, and dovish comments from Federal Reserve officials are all quietly driving potential upside for gold prices. Investors are asking: in a low-interest-rate environment and amidst increased economic uncertainty, will gold usher in a new bull market? This article will analyze the current dynamics of the gold market from multiple perspectives, revealing the underlying logic and opportunities.
The latest indicators of the U.S. economy show clear signs of weakness, which directly reinforces market expectations of a shift in the Federal Reserve's monetary policy.
Retail sales rose only 0.2% in September, far below economists' expectations of 0.4%, and the strong 0.6% growth in August failed to continue. This signal of slowing consumption has raised concerns among investors about a general weakening of U.S. economic momentum.
Regarding the Producer Price Index (PPI), although the month-on-month increase of 0.3% in September met expectations, the year-on-year increase of 2.7% remained unchanged from August, indicating that inflationary pressures remain stubbornly persistent. This sign of "stagflation"—weak demand coupled with strong prices—further highlights economic uncertainty.
Furthermore, the consumer confidence index fell to 88.7 in November, far below the revised 95.5 in October. This deterioration in confidence was directly reflected in consumers postponing purchases of big-ticket items, further hindering the pace of economic recovery.
Although these data were delayed due to the prolonged government shutdown, they confirm the trend of economic slowdown. Market analysts point out that while this older data lacks real-time relevance, it corroborates economists' suspicions in many ways: weakening consumption and persistent inflation provide evidence for the Federal Reserve's decisions. In this economic environment, gold, as a non-interest-bearing asset, naturally benefits from low interest rate expectations, as it tends to perform well during periods of economic instability.
Recent statements from Federal Reserve officials have been a key catalyst for the stabilization and potential rise in the gold market. Fed Governor Milan explicitly called for further interest rate cuts to address the deteriorating job market, echoing dovish comments from Governor Waller.
Waller stated that the weak job market is sufficient to support another 25 basis point rate cut in December, and similar remarks by New York Fed President Williams last week further bolstered market confidence.
Data from the Chicago Mercantile Exchange shows that traders’ assessment of the probability of a Federal Reserve rate cut in December has surged from 40% last week to 85%, and the probability of another rate cut in January has reached 65%.
This dovish shift was also influenced by potential candidates for Federal Reserve chairman. White House economic advisor Hassett, considered a frontrunner to succeed Powell, has further boosted market sentiment with his dovish stance—repeatedly emphasizing that interest rates are too high.
U.S. Treasury Secretary Bessant said that President Trump is likely to announce his new nominee before Christmas, which has fueled investor optimism about a downward trend in interest rates in 2026.
Peter Grant, senior metals strategist at Zaner Metals, analyzed that the Federal Reserve's dovish comments have rekindled hopes for a December rate cut, a view that economic data has not changed. In a low-interest-rate environment, gold's appeal has significantly increased, as it is not suppressed by rising interest rates but rather stands out amidst geopolitical and economic uncertainty.
The gold market's movements are not isolated but closely linked to the bond, currency, and stock markets. U.S. Treasury yields fell for the fourth consecutive trading day, with the 10-year yield hitting a near one-month low of 4% on Tuesday, and the two-year yield also falling to 3.461%, its lowest level since October 24. This reflects strong expectations in the bond market for a dovish shift by the Federal Reserve, resulting in a steepening yield curve and widening the two-year/ten-year yield spread from 53 basis points to 54 basis points. Demand was weak at the five-year Treasury auction, with a winning bid of 3.562%, as investors demanded a small premium, partly due to the continuation of the rally driven by Hassett's news.
Slawomir Soroczynski, head of fixed income at Crown Agents Investment Management, believes that while the data is old, it confirms the trend of economic slowdown and price pressures, offering limited trading opportunities but being generally positive for the bond market.
In the currency market, the dollar index fell 0.5% to 99.746 on Tuesday, dragged down by economic data and dovish comments from the Federal Reserve. The euro rose 0.5% against the dollar to 1.1576, and the pound rose 0.8% against the dollar to 1.3203. Juan Perez, trading director at Monex USA, noted that this decline was reasonable, as data showed signs of stagflation at the end of the third quarter. A weaker dollar directly benefits gold, as gold is priced in dollars, and a depreciating dollar pushes up gold prices.
Stocks continued their upward trend, with the Dow Jones Industrial Average rising 1.43% to 47,112.45 points, the S&P 500 gaining 0.91% to 6,765.89 points, and the Nasdaq Composite climbing 0.67% to 23,025.59 points. Although a 2.6% decline in technology stocks like Nvidia limited the Nasdaq's gains, the overall market benefited from rising bets on interest rate cuts.
Paul Nolte, market strategist at Murphy & Sylvest, said the market has shifted from "no action in December" to "a rate cut is a must," and is optimistic about Hassett's dovish expectations. This stock market optimism has indirectly supported gold's status as a safe-haven asset, especially given the backdrop of economic data supporting a rate cut but weakness in the technology sector.
Looking ahead, the gold market presents a wealth of opportunities. Spot gold held steady at $4,130, while gold futures settled up 1.1% at $4,140, reflecting a positive market response to interest rate cuts. Amid low interest rates, geopolitical uncertainty, and an economic slowdown, gold is expected to continue attracting inflows. Its non-interest-bearing nature makes it stand out in the current environment, especially as the dollar weakens and bond yields fall, further opening up upside potential for gold prices. However, investors should be wary of risks: while economic data supports rate cuts, if future data exceeds expectations or the Federal Reserve unexpectedly shifts its policy, gold prices may face a correction. Furthermore, data delays caused by government shutdowns also increase market uncertainty.
Today, investors should pay attention to news regarding the Russia-Ukraine situation and the Federal Reserve's Beige Book. Additionally, they should closely monitor changes in market expectations for the December Fed meeting and the dynamics of potential chair candidates. In the short term, it is recommended to monitor the breakout of the 4100-4160 range.
(Spot gold daily chart, source: FX678)
At 07:33 Beijing time, spot gold was trading at $4132.39 per ounce.
Weak US economic data: Slowing consumption and persistent inflation coexist.
The latest indicators of the U.S. economy show clear signs of weakness, which directly reinforces market expectations of a shift in the Federal Reserve's monetary policy.
Retail sales rose only 0.2% in September, far below economists' expectations of 0.4%, and the strong 0.6% growth in August failed to continue. This signal of slowing consumption has raised concerns among investors about a general weakening of U.S. economic momentum.
Regarding the Producer Price Index (PPI), although the month-on-month increase of 0.3% in September met expectations, the year-on-year increase of 2.7% remained unchanged from August, indicating that inflationary pressures remain stubbornly persistent. This sign of "stagflation"—weak demand coupled with strong prices—further highlights economic uncertainty.
Furthermore, the consumer confidence index fell to 88.7 in November, far below the revised 95.5 in October. This deterioration in confidence was directly reflected in consumers postponing purchases of big-ticket items, further hindering the pace of economic recovery.
Although these data were delayed due to the prolonged government shutdown, they confirm the trend of economic slowdown. Market analysts point out that while this older data lacks real-time relevance, it corroborates economists' suspicions in many ways: weakening consumption and persistent inflation provide evidence for the Federal Reserve's decisions. In this economic environment, gold, as a non-interest-bearing asset, naturally benefits from low interest rate expectations, as it tends to perform well during periods of economic instability.
The Federal Reserve has shifted its dovish stance: the probability of a rate cut has surged to 85%.
Recent statements from Federal Reserve officials have been a key catalyst for the stabilization and potential rise in the gold market. Fed Governor Milan explicitly called for further interest rate cuts to address the deteriorating job market, echoing dovish comments from Governor Waller.
Waller stated that the weak job market is sufficient to support another 25 basis point rate cut in December, and similar remarks by New York Fed President Williams last week further bolstered market confidence.
Data from the Chicago Mercantile Exchange shows that traders’ assessment of the probability of a Federal Reserve rate cut in December has surged from 40% last week to 85%, and the probability of another rate cut in January has reached 65%.
This dovish shift was also influenced by potential candidates for Federal Reserve chairman. White House economic advisor Hassett, considered a frontrunner to succeed Powell, has further boosted market sentiment with his dovish stance—repeatedly emphasizing that interest rates are too high.
U.S. Treasury Secretary Bessant said that President Trump is likely to announce his new nominee before Christmas, which has fueled investor optimism about a downward trend in interest rates in 2026.
Peter Grant, senior metals strategist at Zaner Metals, analyzed that the Federal Reserve's dovish comments have rekindled hopes for a December rate cut, a view that economic data has not changed. In a low-interest-rate environment, gold's appeal has significantly increased, as it is not suppressed by rising interest rates but rather stands out amidst geopolitical and economic uncertainty.
Bond, foreign exchange, and stock markets move in tandem: Gold benefits from the reshaping of the market ecosystem.
The gold market's movements are not isolated but closely linked to the bond, currency, and stock markets. U.S. Treasury yields fell for the fourth consecutive trading day, with the 10-year yield hitting a near one-month low of 4% on Tuesday, and the two-year yield also falling to 3.461%, its lowest level since October 24. This reflects strong expectations in the bond market for a dovish shift by the Federal Reserve, resulting in a steepening yield curve and widening the two-year/ten-year yield spread from 53 basis points to 54 basis points. Demand was weak at the five-year Treasury auction, with a winning bid of 3.562%, as investors demanded a small premium, partly due to the continuation of the rally driven by Hassett's news.
Slawomir Soroczynski, head of fixed income at Crown Agents Investment Management, believes that while the data is old, it confirms the trend of economic slowdown and price pressures, offering limited trading opportunities but being generally positive for the bond market.
In the currency market, the dollar index fell 0.5% to 99.746 on Tuesday, dragged down by economic data and dovish comments from the Federal Reserve. The euro rose 0.5% against the dollar to 1.1576, and the pound rose 0.8% against the dollar to 1.3203. Juan Perez, trading director at Monex USA, noted that this decline was reasonable, as data showed signs of stagflation at the end of the third quarter. A weaker dollar directly benefits gold, as gold is priced in dollars, and a depreciating dollar pushes up gold prices.
Stocks continued their upward trend, with the Dow Jones Industrial Average rising 1.43% to 47,112.45 points, the S&P 500 gaining 0.91% to 6,765.89 points, and the Nasdaq Composite climbing 0.67% to 23,025.59 points. Although a 2.6% decline in technology stocks like Nvidia limited the Nasdaq's gains, the overall market benefited from rising bets on interest rate cuts.
Paul Nolte, market strategist at Murphy & Sylvest, said the market has shifted from "no action in December" to "a rate cut is a must," and is optimistic about Hassett's dovish expectations. This stock market optimism has indirectly supported gold's status as a safe-haven asset, especially given the backdrop of economic data supporting a rate cut but weakness in the technology sector.
Gold Market Outlook: Opportunities and Risks Coexist
Looking ahead, the gold market presents a wealth of opportunities. Spot gold held steady at $4,130, while gold futures settled up 1.1% at $4,140, reflecting a positive market response to interest rate cuts. Amid low interest rates, geopolitical uncertainty, and an economic slowdown, gold is expected to continue attracting inflows. Its non-interest-bearing nature makes it stand out in the current environment, especially as the dollar weakens and bond yields fall, further opening up upside potential for gold prices. However, investors should be wary of risks: while economic data supports rate cuts, if future data exceeds expectations or the Federal Reserve unexpectedly shifts its policy, gold prices may face a correction. Furthermore, data delays caused by government shutdowns also increase market uncertainty.
Today, investors should pay attention to news regarding the Russia-Ukraine situation and the Federal Reserve's Beige Book. Additionally, they should closely monitor changes in market expectations for the December Fed meeting and the dynamics of potential chair candidates. In the short term, it is recommended to monitor the breakout of the 4100-4160 range.
(Spot gold daily chart, source: FX678)
At 07:33 Beijing time, spot gold was trading at $4132.39 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
