Gold prices dipped a little on Thursday after a solid run earlier in the week. The small pullback comes as markets grow more confident that the Federal Reserve will cut interest rates in December.
Hints of a softer, more dovish successor to Jerome Powell also added to expectations of lower rates in the long term. Weak economic data from the United States gave traders even more reason to believe rate cuts are coming.
The dollar fell on these expectations, which helped metals rally this week. Silver made one of the biggest moves and climbed close to its all time high. Platinum also performed well on Thursday.
Spot gold slipped by about zero point one percent to four thousand one hundred sixty dollars an ounce. Gold futures dropped by about zero point two percent to four thousand one hundred ninety two dollars an ounce.
Even with the small decline today, gold is still up more than two percent over the past week. Traders have been increasing their bets that the Fed will cut rates at its meeting on December ninth and tenth. According to CME’s FedWatch tool, markets now see an eighty five percent chance of a quarter-point cut. Just a week ago, that probability was only thirty nine percent.
Two Fed officials recently hinted that the central bank may need to support the economy more. Several soft economic numbers also pointed to a weakening labor market. All of this strengthened the view that the Fed will move toward lower interest rates.
Geopolitics boosted gold as well. Reports of slow progress toward a US-brokered ceasefire between Russia and Ukraine, along with rising tensions between Japan and China, increased investor demand for safe haven assets like gold.
Lower interest rates usually make gold more attractive because it does not pay interest. When rates fall, investors tend to shift away from government bonds and into assets like gold.
There is also growing attention on who will lead the Federal Reserve in the future. Bloomberg reported that Kevin Hassett, who is close to President Donald Trump, is seen as the top contender to replace Jerome Powell when his term ends in May twenty twenty six. Analysts believe Hassett would strongly support lower interest rates if he becomes the next Fed Chair.
Gold now sits at a key moment, supported by both rate cut expectations and rising safe haven demand.