Gold climbs to over one-week high amid rising Fed rate cut bets, geopolitical risks
- Gold attracts buyers for the second straight day as Fed rate cut bets undermine the USD.
- Persistent geopolitical uncertainties offset positive risk tone and benefit the commodity.
- Traders now look forward to important US macro releases for some meaningful impetus.
Gold (XAU/USD) touches a one-and-a-half-week top during the Asian session on Tuesday and looks to build on the previous day's nearly 2% rally amid dovish US Federal Reserve (Fed) expectations. In fact, traders ramped up for another interest rate cut by the US central bank in December following the recent comments from influential FOMC members. This, in turn, keeps a lid on the recent US Dollar (USD) rally to its highest level since late May and acts as a tailwind for the non-yielding yellow metal.
Apart from this, persistent geopolitical uncertainties stemming from the intensifying Russia-Ukraine war and fresh conflicts in the Middle East turn out to be another factor that benefits the safe-haven Gold. However, a generally positive tone around the equity markets is holding back the XAU/USD bulls from placing aggressive bets. Traders also seem reluctant and keenly await this week's key US macro releases, starting with the Producer Price Index (PPI) and Retail Sales on Tuesday, for some impetus.
Daily Digest Market Movers: Gold draws support from rising December Fed rate cut bets
- New York Federal Reserve President John Williams said on Friday that interest rates could fall in the near term without putting the central bank's inflation goal at risk. Adding to this, Fed Governor Christopher Waller said on Monday that the job market is weak enough to warrant another quarter-point rate cut in December.
- According to CME Group's FedWatch tool, the futures-market-implied probability of a 25 basis points rate reduction to a range of 3.50% to 3.75% in December now stands at around 80%. This fails to assist the US Dollar to build on last week's strong move up to a multi-month high and lends support to the non-yielding Gold.
- Russia launched a wave of attacks on Ukraine’s capital, Kyiv, early Tuesday (November 25, 2025), striking residential buildings and energy infrastructure. The attack follows negotiations between the US and Ukraine representatives in Switzerland over the weekend about a US-brokered plan to end a nearly four-year-old war.
- The White House said US President Donald Trump remains hopeful and optimistic that a deal can be struck, though he cautioned that any progress remains uncertain. According to a Ukrainian official, the US-proposed Russia-Ukraine peace plan now has 19 points and does not include a strict limit on the size of the Ukrainian army.
- The changes, however, could very well be less acceptable to Russia. Furthermore, Israel, according to the Gaza Government Media Office, has violated the United States-brokered Gaza ceasefire at least 497 times in 44 days. This keeps geopolitical risks in play and turns out to be another factor supporting the safe-haven precious metal.
- Traders now look forward to Tuesday's US economic docket – featuring the delayed release of the US Producer Price Index and Retail Sales figures, along with Pending Home Sales and Richmond Manufacturing Index. This could influence the USD price dynamics and produce short-term trading opportunities around the XAU/USD pair.
Gold seems poised to climb further and could aim to reclaim $4,200
The overnight goodish rebound validated the $4,022 confluence support – comprising an upward sloping trend-line extending from late October and the 200-period Exponential Moving Average (EMA) on the 4-hour chart. The subsequent move up and positive oscillators on 4-hour/daily charts back the case for a further near-term appreciating move for the XAU/USD pair. Hence, some follow-through strength towards the $4,177-4,178 region, en route to the $4,200 round figure, looks like a distinct possibility. The momentum could extend further towards testing the monthly swing high, around the $4,245 zone.
On the flip side, any pullback below the $4,132-4,130 area might now be seen as a buying opportunity and find decent support near the $4,110-4,100 region. A convincing break below the latter would expose the aforementioned confluence, currently pegged near the $4,032-4,030 zone, which, if broken, might shift the near-term bias in favor of bears and drag the Gold price to the $4,000 psychological mark. Some follow-through selling should pave the way for a fall towards last week's swing low, around the $3,968-3,967 area, en route to the $3,931 support, the $3,900 mark and late October swing low, around the $3,886 region.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.