[TMGM Financial Breakfast] Gold prices continue to strengthen as investors bet on a Fed rate cut in December!

Spot gold has had a strong start this month, climbing on Monday to its highest level since October 21. Safe-haven demand has provided support, while investors expect the Federal Reserve to cut rates again at its December 9–10 monetary policy meeting.

Investors are now turning their attention to key U.S. economic data to be released this week, which may affect rate-cut expectations. Following dovish comments from multiple policymakers and weak U.S. data last week, markets have now priced in roughly an 87% probability that the Fed will cut rates by 25 basis points at next week’s meeting.

The Fed’s dovish policy outlook continues to weigh on the U.S. dollar, lowering the cost of gold for overseas buyers and further boosting gold prices.

This week, risk-off sentiment has swept through markets, putting pressure on global equities, which fell on Monday. In the U.S., investors remain cautious ahead of key economic data and the December 9–10 Fed meeting. In Asia, markets were dragged lower by hawkish comments from Bank of Japan Governor Kazuo Ueda. In China, the Caixin Manufacturing Purchasing Managers’ Index (PMI) for November fell to 49.9, adding to market caution.

Markets are also watching for possible changes in the Fed’s leadership. U.S. President Trump said on Sunday that he knows whom he will pick and will announce it soon. Reports suggest Kevin Hassett is a leading candidate to replace Jerome Powell. Given Hassett’s previous support for rate cuts, this has reinforced market expectations that the Fed may take an even more dovish policy path.

On the geopolitical front, markets are focusing on Russia–Ukraine peace talks. Over the weekend, Russia and Ukraine held four hours of talks in Florida, which U.S. and Ukrainian officials described as difficult but productive. U.S. negotiator Steve Vitkov is expected to travel to Moscow today for follow-up talks and may meet Russian President Vladimir Putin on Tuesday.

In addition, Monday’s ISM Manufacturing PMI came in at 48.2, below expectations of 48.6. Later this week, market attention will shift to Friday’s release of the Personal Consumption Expenditures (PCE) report.

Market Analysis:

On the 4-hour chart, gold is fluctuating lower in a choppy pattern, with MACD lines and histogram expanding above the zero line. Gold prices may be supported by the irregular trading hours of the Chicago Mercantile Exchange and the Fed’s ongoing dovish tilt. Fed policymakers are continually signaling the possibility of lowering borrowing costs, which is favorable for gold, as gold is a non-yielding asset.