Gold Eases as Fed Rate-Cut Hopes Fade After Hawkish Remarks from Policymakers

Gold prices edged lower after touching a weekly high as hawkish comments from Federal Reserve officials weakened expectations of a December rate cut. Still, bullion is set for a 4% weekly gain amid rising global economic uncertainty.

1. Gold Pulls Back Slightly but Remains on Track for a Strong Weekly Gain

Gold prices slipped on Friday after hitting their highest level of the week, as investors tempered expectations of a U.S. interest-rate cut in December.
Spot gold was steady at $4,169.58 per ounce at 0930 GMT, after climbing as high as $4,211.06 earlier in the session. Bullion remains up 4.3% for the week, marking one of its strongest performances since July.

U.S. gold futures for December delivery eased 0.2% to $4,185.90 per ounce, as Treasury yields rose and the U.S. dollar strengthened following hawkish remarks from Federal Reserve officials.

Analysts noted that gold continues to draw support from the cautious tone across global financial markets, though upside momentum remains capped as traders scale back bets on an imminent Fed rate cut.

2. Hawkish Fed Comments Weigh on December Rate-Cut Expectations

A wave of hawkish commentary from Federal Reserve officials this week has clouded the outlook for monetary easing, with several policymakers highlighting that inflation remains sticky and the U.S. labor market resilient.

According to the CME Group’s FedWatch tool, markets now price in a 49% chance of a quarter-point rate cut in December, down from 64% earlier this week and nearly 90% a month ago.
This shift underscores growing uncertainty about whether the Fed will move ahead with additional rate cuts before year-end.

Ricardo Evangelista, senior analyst at ActivTrades, said:

“Gold prices are receiving support from the cautious mood that has set in across financial markets, but the upside remains limited by growing doubts about a Federal Reserve rate cut in December.”

3. U.S. Government Reopens but Data Gaps Persist

The reopening of the U.S. government after a record 43-day shutdown has allowed the resumption of key data flows that had been frozen for weeks.
However, the White House warned that October’s jobs report might not be released, leaving markets with little clarity on the true state of the economy.

The absence of fresh data has made investors highly sensitive to Fed communication, with every speech or interview by officials now closely scrutinized for policy clues.
Evangelista added that:

“Gold may also face pressure from position-closing to meet margin calls triggered by declines in equity markets, which have tumbled following hawkish Fed signals.”

4. Broader Uncertainty Continues to Support Safe-Haven Demand

Despite the recent pullback, gold continues to benefit from its role as a safe-haven asset, as concerns over global growth, rising debt levels, and inflation persistence keep investors on edge.
The selloff in global equities and ongoing volatility in risk assets have only reinforced demand for precious metals.

Alex Ebkarian, Chief Operating Officer at Allegiance Gold, noted:

“As the cost of the government shutdown becomes clearer and additional spending unfolds, the combination of inflation and growth uncertainty continues to favor precious metals.”

Non-yielding gold typically performs well during periods of economic uncertainty and low-interest-rate environments, when investors seek safety over returns.

5. Silver Surges, Set for Its Best Week Since September 2024

Silver also extended gains, with spot silver rising 0.9% to $52.78 per ounce, putting it on track for a 9.2% weekly increase — its strongest since September 2024.
Analysts said the rally reflects broader investor diversification within the metals space and renewed confidence in longer-term precious metal demand.

Silver, known for its higher volatility, often benefits from monetary policy easing and a weaker dollar.
The parallel rise in both gold and silver this week underscores a defensive shift in market sentiment, as investors seek protection from turbulence in stocks and cryptocurrencies.

Conclusion

Despite a modest pullback late in the week, gold remains on solid footing, supported by economic uncertainty and investor caution.
While hawkish comments from Fed officials have dampened expectations for a December rate cut, many analysts still see room for further gains if global growth continues to weaken.
In the short term, gold is likely to trade between $4,150 and $4,220 per ounce, with strong support seen near $4,100.
A softer tone from the Fed or weaker economic data could easily trigger another upward leg for the precious metal.

FQAs

1. Why did gold prices dip on Friday?
→ Hawkish comments from Federal Reserve officials reduced the odds of a December rate cut, strengthening the dollar and prompting mild profit-taking in gold.

2. What are the current expectations for a Fed rate cut?
→ Traders see about a 49% probability of a 0.25% rate cut in December, down sharply from 64% earlier in the week.

3. Why is gold still up for the week despite the pullback?
→ Investors continue to view gold as a safe-haven asset amid global uncertainty, volatile equities, and mixed economic signals.

4. Why did silver outperform gold this week?
→ Silver’s higher volatility and sensitivity to policy easing helped it benefit more strongly from safe-haven inflows and a softer outlook for global growth.