Gold Surges as Fed Rate Cut Odds Nearly Triple in One Week

TLDR

• Gold prices rose 0.6% to $4,183.01 per ounce in Asian trading on Friday
• The metal is up 4.6% in November, marking its fourth consecutive monthly gain
• Markets now price in an 82.8% chance of a Fed rate cut on December 9-10, up from 28.5% last week
• CME trading was disrupted Friday morning due to a cooling issue at CyrusOne data centers
• Gold is testing a technical breakout above $4,200, though thin Thanksgiving holiday volumes raise questions

Gold prices moved higher on Friday during Asian trading hours, reaching $4,183.01 per ounce with a 0.6% gain. The precious metal is heading toward its fourth straight month of increases.

November has been strong for gold, with prices up 4.6% for the month. The metal also posted a nearly 3% gain for the week ending November 28.

The main driver behind gold’s recent strength is growing expectations for a Federal Reserve interest rate cut in December. According to CME Fedwatch, markets are now pricing in an 82.8% probability of a 25 basis point rate cut at the Fed’s December 9-10 meeting. This represents a sharp increase from the 28.5% chance traders saw just one week earlier.

Several factors contributed to this shift in rate cut expectations. Some Federal Reserve officials made dovish comments during the week. Weak U.S. economic data also supported the case for lower rates.

The U.S. dollar weakened through the week, which helped precious metals across the board. Platinum jumped 2.4% to $1,643.04 per ounce on Friday. Silver climbed 1.3% to $54.0905 per ounce, moving close to its record high.

For the full month of November, platinum was up 4.5% while silver gained 11.3%. Gold initially fell earlier in the session but quickly resumed its upward movement as traders maintained their rate cut bets.

Beyond monetary policy, other factors supported safe haven demand for gold. The equity market rally showed signs of cooling. Geopolitical tensions around the Russia-Ukraine war continued. A diplomatic dispute between China and Japan added to global uncertainty.

Trading conditions were disrupted Friday morning when the Chicago Mercantile Exchange experienced an outage. The problem started at 00:00 ET due to a cooling issue at CyrusOne data centers. Futures contracts for gold, platinum, copper, and silver all stopped trading at that time.

CME Group released a statement saying they were working to resolve the technical issue. The outage affected both commodity futures and equity futures trading. Trading volumes were already thin due to the U.S. Thanksgiving holiday on Thursday.

From a technical standpoint, gold is testing a breakout pattern. The metal has been trading within a flag or wedge formation. Buyers pushed prices above this technical pattern on Friday, testing the waters above the recent trading range.

A close above $4,200 would break the mid-November high and strengthen the case for continued upward movement. This level could signal a resumption of the broader uptrend. The October highs would become the next target for gold buyers.

However, the timing of this technical test raises some questions. The Thanksgiving holiday period typically sees reduced market liquidity. Month-end flows are also affecting trading as November closes and December begins.

Spot gold was last trading at $4,183.01 per ounce as of 01:21 ET on Friday. The metal remains near multi-month highs as traders look ahead to the December Fed meeting.

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