In Wednesday's Asian trading session, spot gold prices showed an upward trend. The market widely anticipates that the Federal Reserve will implement a 25-basis-point rate cut next week, providing strong support for gold prices. Meanwhile, geopolitical tensions persist as Russia and the U.S. failed to reach a compromise on the Ukraine issue, further fueling safe-haven demand. Notably, although gold prices fell below the $4,200 mark overnight, this attracted medium- to long-term investors to buy on dips.
According to CME's FedWatch tool, the probability of a Fed rate cut in December is as high as 89%. Additionally, U.S. President Trump revealed plans to announce a successor for Fed Chair Powell early next year, with Kevin Hassett emerging as a leading candidate. Hassett, known for his close ties to the Trump administration and advocacy for faster rate cuts, has drawn significant attention.
Russian Presidential Foreign Policy Advisor Ushakov stated on Wednesday that Russia and the U.S. failed to reach consensus on Ukraine's peace process, with no progress or deadlock observed. He emphasized that core territorial disputes remain unresolved.
Market expectations for a 25-basis-point Fed rate cut in December are now fully priced in at 89%, providing strong momentum for gold's upward movement. Concurrently, ongoing central bank gold purchases offer mid-term support. The U.S. dollar index is currently in a correction phase, allowing gold prices to maintain a fluctuating uptrend as the market awaits a breakout above key resistance levels. However, with gold approaching historical highs, volatility has increased, and investors should remain cautious of potential pullbacks.
CME FedWatch data shows an 89.2% probability of a 25-basis-point rate cut in December, with only a 10.8% chance of rates remaining unchanged. By January next year, the probability of a cumulative 25-basis-point cut stands at 66.6%, while the likelihood of no change is 7.7%, and a 50-basis-point cut is priced at 25.7%.
Gold prices may continue to trade within a range until the Fed provides clearer monetary policy guidance. Despite significant year-to-date gains that have exceeded fundamental support, future volatility could rise. However, with the Fed still in a rate-cutting cycle and the U.S. dollar's credibility under pressure, most analysts believe the gold bull market is not over, recommending investors maintain an overweight strategy and accumulate on dips.
This week, investors will also focus on key economic data, including November's ADP employment figures on Wednesday and the Fed's preferred inflation gauge—the September PCE index—on Friday. These releases will offer crucial insights into the U.S. economic outlook and future monetary policy direction.
As of 10:48 Beijing time, spot gold was trading at $4,227.75 per ounce, up 0.53% on the day.
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