Gold Holds Ground As Investors Parse U.S. Inflation Data Amid Fed Rate Cut Expectations

(RTTNews) - Gold prices steadied on Friday as traders analyzed today's U.S. inflation data along with this week's job numbers while expectations of a Federal Reserve rate cut next week have firmed up.

Front Month Comex Gold for December delivery ticked up by $1.10 (or 0.03%) to $4,212.90 per troy ounce. Gold shed $5.40 (or 0.13%) per troy ounce for this week.

Front Month Comex Silver for December delivery soared by $1.575 (or 2.77%) to $58.422 per troy ounce. Silver skyrocketed by $1.9760 (or 3.50%) per troy ounce for this week.

Notably, this is a new record high for silver prices which have been up for the past two consecutive weeks.

Wednesday's Automatic Data Processing private data revealed that U.S. businesses cut 32,000 jobs in November.

Aligning with ADP, Thursday's Challenger private data too showed that U.S.-based employers announced 71,321 job cuts in November. However, the Department of Labor revealed a slump in the initial jobless claims by 27,000 from the previous week to 191,000 in the weekended November 29.

Despite this running contrary to private estimates, analysts have not discounted concerns of a deterioration in labor market, cementing the reasons for rate cut expectations.

The delayed data on month-on-month core Personal Consumption Expenditure price index (i.e., excluding volatile and energy prices) which is seen as a preferred measure of inflation by the U.S. Federal Reserve, rose 0.2% in September. On a year-on-year basis, the core PCE price index rose by 2.8% from September 2024.

In line with expectations, the PCE price index rose 0.3% month-over-month in September. On a year-on-year basis, the PCE price index increased 2.8% in September.

The Federal Open Market Committee is set to meet next Tuesday and Wednesday. Expectations run high that the FOMC would concur on a quarter-point rate cut to the benchmark rate. The prevailing rate ranges between 3.75% to 4.00%.

Yesterday, Kevin Hassett, who is seen as U.S. President Donald Trump's favorite to take over as Federal Reserve Chair next year, stated that Trump's tariffs are playing a meaningful role in combating the huge $38 trillion national debt.

Hassett is an explicit supporter of cutting interest rates faster, a demand that Trump has also been making to current Fed Chair Jerome Powell for several months. Trump had even nudged the Fed to reduce the benchmark rate to as low as 1%.

According to some analysts, fluctuations in gold prices in the coming days would be not due to rate cut per se but due to the change in expectations about future rate cuts.

Hence, Hassett being the frontrunner in the race to lead the central bank has bolstered the expectations of further rate cuts.

Data revealed by the World Gold Council from days before revealed that despite a recent surge in gold prices, central banks across the world have accelerated their gold purchases.

Official-sector gold purchases totalled 53 tonnes in October, a 36% increase month-on-month indicating increasing momentum in gold buying.

On Tuesday, the U.S. envoy to Russia, Steven Witkoff and Trump's son-in-law Jared Kushner visited Moscow to discuss the U.S. peace plan to end the Russia-Ukraine war with Russian President Vladimir Putin.

With no significant breakthrough after the meeting, Russian officials announced that "no compromise" has been reached on territorial issues.

While Ukraine-friendly European nations warned Ukrainian President Volodymyr Zelenskyy that the U.S. could betray Ukraine, Putin accused European nations of attempting to sabotage the peace talks.

As the U.S. team is set to meet with Ukrainian negotiators in Florida to hear their set of demands, Russia stated today that it is awaiting a response from the White House and Donald Trump.

The U.S. dollar index was last seen trading at 99.00, up by 0.02 (or 0.02%) today.

According to CME Group's FedWatch Tool, investors are betting on an 87.2% chance of a 25-basis-point interest rate cut in the upcoming Federal Reserve's meeting on December 9-10.

The continuing geopolitical tension as well as the prevailing macroeconomic uncertainty supported gold on the upside.