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Gold Prices Hold Below $4,000 Amid Fed Rate Hike Speculation
Confirmed
In Short: Gold prices remain below $4,000 as market participants anticipate a potential Federal Reserve rate hike in December.
Gold futures test $4,000 support as rate hike expectations rise. 11/11/26. CME Group
Gold prices have held below $4,000 as market participants continue to weigh the possibility of a Federal Reserve rate hike in December. StoneX Senior Market Strategist Bob Haberkorn noted that the recent Consumer Price Index (CPI) report came in hotter than expected, suggesting a higher rate hike is warranted at the December meeting.
The latest US Nonfarm Payrolls (NFP) data for September showed the economy added only 29,000 jobs, well below market expectations of 90,000, with the Unemployment Rate ticking up to 4.2%, slightly above forecasts.
The US Personal Consumption Expenditures (PCE) data for August also came in below market expectations, printing at 3.4% year-over-year, well below expectations of 3.7%. This has crashed expectations of a rate hike in the Federal Reserve's October meeting to 23.8%, down from above 70% a few days earlier.
Gold, a non-yielding asset, faces increased opportunity costs when interest rates rise, thus dampening the market's incentive to increase gold holdings. The current market assessments suggest that a collapse similar to the one witnessed in 2013 is unlikely, despite further fluctuations.
Gold prices have declined due to profit-booking by investors, improved returns on dollar-denominated investments and bonds, and expectations of a possible interest rate hike by the US Federal Reserve at its December monetary policy meeting.
According to Polymarket’s market, traders gave unchanged rates a 2.9% chance, with each rate-cut outcome below 1%, indicating a near-certain rate hike ahead.
Chris Gaffney, President of Global Markets at EverBank, noted that gold's decline on Wednesday was primarily attributed to interest rates, as May U.S. CPI rose just 0.2% month-on-month, falling short of market expectations.
The reported 97.4% odds remain the latest market expectation cited by Coin Bureau, signaling that markets are still pricing in a Federal Reserve rate hike this year.
Gold faces immediate support near $3,965, followed by the psychologically important $3,950 level, as market participants brace for the Federal Reserve’s policy decision.
What this adds
Gold prices have declined due to profit-booking by investors, improved returns on dollar-denominated investments and bonds, and expectations of a possible interest rate hike by the US Federal Reserve at its December monetary policy meeting.
Background
Federal Reserve Governor Christopher Waller said on Tuesday that he would support a quarter-point rate increase in December, even if October's consumer price data showed an improvement from the previous month.
Despite recent market stability, financial analysts and central bank officials warn that the risk of a key US interest rate rise remains.
What's confirmed
- Gold prices have held below $4,000 as market participants continue to weigh the possibility of a Federal Reserve rate hike in December. StoneX Senior Market Strategist Bob Haberkorn noted that the recent Consumer Price Index (CPI) report came in hotter than expected, suggesting a higher rate hike is warranted at the December meeting.
- The latest US Nonfarm Payrolls (NFP) data for September showed the economy added only 29,000 jobs, well below market expectations of 90,000, with the Unemployment Rate ticking up to 4.2%, slightly above forecasts.
- The US Personal Consumption Expenditures (PCE) data for August also came in below market expectations, printing at 3.4% year-over-year, well below expectations of 3.7%. This has crashed expectations of a rate hike in the Federal Reserve's October meeting to 23.8%, down from above 70% a few days earlier.
- Gold, a non-yielding asset, faces increased opportunity costs when interest rates rise, thus dampening the market's incentive to increase gold holdings. The current market assessments suggest that a collapse similar to the one witnessed in 2013 is unlikely, despite further fluctuations.
- Gold prices have declined due to profit-booking by investors, improved returns on dollar-denominated investments and bonds, and expectations of a possible interest rate hike by the US Federal Reserve at its December monetary policy meeting.
- According to Polymarket’s market, traders gave unchanged rates a 2.9% chance, with each rate-cut outcome below 1%, indicating a near-certain rate hike ahead.
- Chris Gaffney, President of Global Markets at EverBank, noted that gold's decline on Wednesday was primarily attributed to interest rates, as May U.S. CPI rose just 0.2% month-on-month, falling short of market expectations.
- The reported 97.4% odds remain the latest market expectation cited by Coin Bureau, signaling that markets are still pricing in a Federal Reserve rate hike this year.
- Gold faces immediate support near $3,965, followed by the psychologically important $3,950 level, as market participants brace for the Federal Reserve’s policy decision.
What's still developing
- Despite declining rate-hike expectations, US 10-year note yields have remained strong.
- Price action and moves across these key metrics indicate that market participants are discounting the impact of no rate hike this month.
- Despite geopolitical concerns and gold's traditional safe-haven status, it has acted as a liquid asset, easily sold during market volatility.
- The risks to oil prices, however, are still skewed higher, as stockpiles draw down quickly and demand destruction is increasingly the only real lever left to bring the market back into balance.
- Gold and silver declined sharply on Friday, October 30, as stronger US economic data reinforced expectations of further Federal Reserve tightening, putting precious metals under pressure despite renewed weakness in global equity markets.
- With a 25-basis-point hike already fully priced into the market, the focus is likely to fall on the central bank’s forward guidance.
- September's wage growth is "the lowest since May 2021," Long said.
Sources
- FXStreetlink
- Fxstreetlink
- Tradingkeylink
- Englishlink
- Hokanewslink
- Gulfnewslink
- Cryptolink
- Qzlink
- Economieslink
- Yellowlink
- Currencynewslink
- CBS Newslink
- Selectcarleasinglink
- WarpBeat — background on Fed’s Waller opens door to half-point rate hike in December link
- WarpBeat — background on US Interest Rate Hike Risk Persists Amid Market Stability link
- CME Group — video link
- Gold Price Today USA — video link