Spot gold led early trading today, with London gold prices surging at press time while COMEX gold showed bearish divergence. Uncertainty over the next Federal Reserve chair has intensified.
Analysts widely agree that sustained central bank gold purchases have disrupted traditional supply-demand dynamics, with anticipated Fed monetary easing expected to further boost gold. Long-term price drivers remain dollar purchasing power, reserve policies, and geopolitical risks.
Regarding rate cuts, leading Fed chair candidate Kevin Hassett reiterated support for further easing. The White House NEC director aligned with Austan Goolsbee's view that substantial rate cut room remains, noting the U.S. isn't experiencing "employment recession" and inflation overshooting has ended. Hassett emphasized President Trump wants an independently-minded Fed chair who follows data-dependent decision-making.
The Fed leadership race has grown more uncertain this week, with Governor Christopher Waller interviewed by Trump and receiving corporate executive backing. BlackRock's Rick Rieder is scheduled for a late-December interview at Trump's private club, signaling an expanded candidate pool.
Market opinions remain divided. A snap poll of New York conference attendees showed 81% support for Waller, with Hassett and Kevin Warsh splitting remaining votes. Both frontrunners face credibility challenges - critics argue Hassett's current role defending presidential policies disqualifies him from leading an independent central bank.
However, market expectations for January rate cuts have declined. CME FedWatch shows just 21% probability of a 25bps cut by January 2026 (down from previous estimates), with 79% odds of unchanged rates. For March 2026, markets price 47.1% chance of 25bps cumulative cuts, 43.4% for unchanged policy, and 9.5% for 50bps reduction.
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