Gold Rallies as Weak Retail Data Fuels Rate Cut Hopes

Gold prices climbed on Tuesday, driven by fresh signs of a cooling U.S. economy. Softer-than-expected retail sales data has reinforced investor confidence that the Federal Reserve will slash interest rates in December.

Spot gold rose 0.3% to reach $4,150.09 per ounce by the afternoon. The precious metal hit its highest level since mid-November earlier in the day, extending a rally that began on Monday following supportive comments from central bank policymakers.

Economic Data Triggers Optimism

The latest commerce figures provided the catalyst for the surge. U.S. retail sales grew less than anticipated in September, suggesting that consumer momentum is fading after a period of strong gains.

Additionally, the Producer Price Index (PPI) rose 2.7% over the last 12 months, matching the previous month’s pace. This combination of slowing consumption and stable wholesale inflation suggests the Federal Reserve has the breathing room needed to ease monetary policy.

“There’s revived hope for a December rate cut,” noted a market strategist, pointing to the data as confirmation that the economy is ready for lower borrowing costs.

Betting on the Fed

Market expectations have shifted aggressively. Traders are now pricing in an 83% chance of a rate cut at the Fed’s meeting on December 9-10—a massive leap from just 30% last week. The odds of a second reduction in January currently stand at 64%.

This sentiment is backed by recent statements from Fed officials. Governor Stephen Miran remarked on Tuesday that a deteriorating job market warrants further rate cuts, echoing similar dovish views shared by Governor Christopher Waller just a day prior.

Why Gold is Winning

Gold, which does not pay interest, typically performs well when interest rates fall, as it becomes more attractive compared to bonds or savings accounts.

Beyond interest rates, broader instability is also playing a role. Analysts point to ongoing geopolitical turbulence and economic uncertainty as key drivers keeping gold prices supported in the near term.

Metals Market Wrap

The bullish trend wasn’t limited to gold. Other precious metals also saw movement:

• Silver: Held flat at $51.40 per ounce.
• Platinum: Gained 0.4% to $1,550.31.
• Palladium: edged up 0.1% to $1,396.18.

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