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2025-12-17 11:14:26
Gold prices rose on a double boost from expectations of interest rate cuts and geopolitical risks. 1. Spot gold edged higher in Asian trading on Wednesday, rising as much as 0.6% to around $4327 per ounce. The latest US employment data showed the unemployment rate rose to 4.6% in November, higher than the market expectation of 4.4%, reinforcing market expectations of a Federal Reserve interest rate cut next year and putting pressure on the dollar and US Treasury yields. 2. The dollar index fell to a more than two-month low on Tuesday, and the benchmark 10-year US Treasury yield also declined. In an environment of low interest rate expectations, the attractiveness of gold, a non-interest-bearing asset, has increased. Traders currently still expect two 25-basis-point rate cuts in 2026. 3. Geopolitical tensions also provided support for gold prices. US President Trump on Tuesday ordered a complete blockade of all sanctioned oil tankers entering and leaving Venezuela and designated the Venezuelan regime as a foreign terrorist organization, a move that could significantly escalate tensions between the US and Venezuela. Meanwhile, the Russia-Ukraine conflict continues, with Russia stating it has no intention of a ceasefire, as a ceasefire would only give Ukraine a respite to better prepare for continued conflict, and it firmly opposes the deployment of NATO troops in Ukraine. Investors are closely watching upcoming US inflation data, including Thursday's November Consumer Price Index (CPI) and Friday's release of the Federal Reserve's preferred inflation gauge—the Personal Consumption Expenditures (PCE) price index—for further clues about the future path of monetary policy.
