December Rate Cut Bets Push XAU/USD Above $4,140—What's Next for Gold?

The Fed Pivot Is Real

Gold surged to approximately $4,140 during Tuesday’s early Asian trading, propelled by mounting conviction that the Federal Reserve will slash rates by 25 basis points in December. The odds have shifted dramatically—CME FedWatch data now shows an 79% probability of a rate reduction next month, a sharp reversal from the 30% expectations that prevailed before recent Fed commentary. This shift reflects growing pressure from within the central bank itself, with Governor Christopher Waller and San Francisco President Mary Daly both signaling that labor market weakness warrants monetary easing before year-end.

Why does this matter? Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. When bonds and savings accounts pay less, precious metals become relatively more attractive to portfolio managers and retail investors alike—a dynamic that’s particularly relevant for traders monitoring gold rate in philippines and other regional markets where currency fluctuations amplify these shifts.

Market Conviction Is Building Fast

Bart Melek, head of commodity strategies at TD Securities, captured the sentiment succinctly: “The market is increasingly getting convinced that the U.S. Federal Reserve is on track to cut interest rates in December.” This consensus formed rapidly after Fed officials’ recent remarks, suggesting traders have largely priced in the December cut and are now hunting for catalysts that could either reinforce or derail this narrative.

Three Economic Reports Could Upend Everything

The real test comes later Tuesday when three pivotal US economic indicators hit the tape: ADP Employment Change data, Retail Sales, and Producer Price Index (PPI) figures. Expectations suggest a 0.4% month-over-month rise in Retail Sales and a 0.3% increase in the PPI. Here’s the catch: hotter-than-expected inflation readings could reignite Fed hawks’ objections to rate cuts, potentially lifting the US Dollar and pressuring gold prices downward.

Conversely, softer employment data would reinforce the case for monetary accommodation, likely sending XAU/USD toward higher ground as investors rotate into traditional safe havens ahead of year-end volatility.

The window for this week’s trade is narrow, but the stakes are high—for gold traders globally and for anyone tracking precious metal exposure.