CHENNAI: Gold prices continued to climb on Tuesday as financial markets sharply increased their expectations of a US Federal Reserve rate cut in December. The shift in sentiment has strengthened demand for the precious metal, even as the dollar holds relatively firm. Investors are now waiting for the next set of economic signals — including US Producer Price Index (PPI) inflation data and retail sales figures — that could either reinforce or weaken the case for near-term monetary easing.
Spot gold advanced further during the session, extending the momentum built over recent days. Futures also edged higher, supported by growing conviction that the Fed may soon ease policy. Traders now assign a significantly higher probability to a December rate cut, a notable rise from the expectations seen just a week earlier. The change reflects concerns over softening labour-market conditions and a more cautious tone from several Federal Reserve officials who have recently acknowledged the economy’s growing vulnerabilities.
This renewed clarity on monetary policy is favourable for gold, which benefits when interest-rate expectations shift downward. Because gold does not generate yield, its appeal tends to increase when the cost of holding non-yielding assets declines. The possibility of a rate cut as early as December has therefore injected fresh support into bullion prices despite the counterweight of a still-strong U.S. dollar.
Market attention is now focused squarely on upcoming US macroeconomic data. The PPI print will offer a critical view of price pressures at the manufacturing and wholesale levels — an indicator closely watched by the Fed as it evaluates the persistence of inflation. Alongside this, retail sales readings will provide insights into consumer spending strength, a key component of overall economic momentum. Together, these data points will strongly influence whether the Fed remains on course for a cut or chooses to wait for clearer evidence of cooling.
If the incoming data show weaker demand or easing inflation, expectations of a December cut could solidify further, setting the stage for gold to extend its gains. However, any upside surprises — particularly stronger spending or hotter pipeline inflation — could introduce uncertainty and temper bullion’s recent rise. The risk of short-term volatility remains elevated, as gold is now trading in a narrow zone where sentiment is highly sensitive to economic signals and Fed communication.
Despite these short-term risks, the broader mood in gold markets is constructive. Investors continue to seek safety amid lingering concerns about global economic resilience, geopolitical tensions, and uneven growth across major economies. The anticipation of interest-rate relief has added another layer of support, giving gold a stronger foundation heading into the final weeks of the year.
For Indian investors, according to a couple of analysts' reports, the global uptrend in gold often translates into firmer domestic prices, influenced additionally by rupee movements and local market premiums. With global sentiment turning more favourable toward bullion, the Indian market may also experience continued upward bias in the near term.
Ultimately, the next leg of gold’s movement hinges on the data now coming into view. If the numbers reinforce the market’s belief that US monetary easing is imminent, gold may continue to consolidate its gains. If not, the metal could pause or retreat as traders reassess the timing and trajectory of Fed policy, the analyst reports say.