Weak U.S. Data Fuels Rally as Investors Bet on December Policy Shift
Gold prices climbed sharply on Monday, gaining more than 2% to reach a two-week high after soft U.S. economic data bolstered market expectations of an upcoming Federal Reserve interest rate cut. The move lifted investor demand for gold, which traditionally performs well in lower-rate environments.
Spot gold rose 2.3% to $4,090.96 per ounce as of 11:43 a.m. ET, its highest since October 27. U.S. gold futures for December delivery increased 2.2% to $4,099.20 per ounce.
“Some weak data last week has the market tilting a little more dovish in their Fed expectations,” said Peter Grant, vice president and senior metals strategist at Zaner Metals. “We could very much still see a December rate cut.”
Economic Weakness Boosts Safe-Haven Appeal
The latest U.S. data showed the economy lost jobs in October, particularly in the government and retail sectors. Consumer sentiment also slumped in early November, reflecting growing concerns over economic stability.
According to CME Group’s FedWatch tool, markets are now pricing in a 67% probability of a rate cut in December, with those odds rising to nearly 80% by January. The shift underscores rising confidence that the Fed will ease monetary policy amid slowing economic momentum.
Historically, non-yielding gold benefits from lower interest rates, as reduced bond yields make the metal more attractive to investors seeking safe-haven assets during uncertain periods. Analysts expect the trend to continue if the Fed signals a more accommodative stance.
Analysts Eye $5,000 Gold in Early 2026
Grant added that gold could trade between $4,200 and $4,300 per ounce by year-end, with a potential climb to $5,000 per ounce in the first quarter of 2026 if current economic conditions persist.
Meanwhile, the U.S. Senate advanced a measure on Sunday aimed at reopening the federal government after a 40-day shutdown. The development is expected to restore the flow of key economic data and refocus investor attention on the U.S. fiscal deficit.
“A reopening would restore data flow and revive expectations for a December rate cut, but more importantly it shifts market focus back to the deteriorating U.S. fiscal outlook,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Precious Metals Rally Broadens
Gold’s rally was mirrored across the precious metals market. Silver rose 3.6% to $50.03 per ounce, its highest level since October 21. Platinum gained 1.5% to $1,568.41, while palladium advanced 2.2% to $1,411.33.
Analysts suggest the broader metals rally reflects growing investor caution amid mixed U.S. economic signals, tightening fiscal pressures, and renewed volatility in bond markets.
