Gold Advances as Traders Bet on December Rate Cut, Await US Data

A Federal Reserve official has indicated that the central bank should not abandon the possibility of a rate cut in December, despite ongoing challenges in balancing inflation and unemployment. The Fed's dual mandate complicates decision-making, as raising rates can lower inflation but may lead to job losses, while cutting rates can reduce unemployment but potentially increase inflation.

Gold prices have edged higher, buoyed by expectations of potential interest rate cuts from the Federal Reserve, as indicated by recent dovish comments from central bankers, according to ANZ Research. This upward movement reflects a growing sentiment among investors seeking safe-haven assets amid economic uncertainty.

Asian stocks followed Wall Street's upward trend as optimism grew regarding a potential interest rate cut by the Federal Reserve in December, alongside a rebound in technology shares. This shift comes after a week of volatility marked by concerns over inflation and a tech bubble.

US tech stocks, led by the Nasdaq, experienced their largest increase in six months, driven by growing expectations that the Federal Reserve will lower borrowing costs in December. This surge reflects a rebound in investor sentiment following recent volatility in the market.

Jim Caron, CIO of Morgan Stanley Investment Management, stated on Bloomberg that the market is uncertain about the likelihood of a Federal Reserve rate cut in December, suggesting a 50/50 chance. This uncertainty follows mixed signals from economic indicators and employment data.

Gold prices on the Comex market settled 0.37% higher at $4091.90, marking a positive trend as it has risen for the second consecutive session. Silver also experienced an increase, reflecting a recovery in precious metals after recent fluctuations.

The Federal Reserve is facing challenges in convincing some banks to utilize the standing repo facility, a tool intended to enhance its control over short-term money markets. Despite the Fed's reassurances, concerns about the implications of using this facility persist among financial institutions.

Morgan Stanley strategist Michael Wilson expressed a bullish outlook for stocks in 2026, projecting the S&P 500 to reach 7,800. He emphasized the necessity for the Federal Reserve to implement rate cuts and highlighted the ongoing rally in AI stocks during an interview on Bloomberg Surveillance.