Gold's Fate Hinges on Fed's Imminent December Rate Decision - Expert
WASHINGTON (Sputnik) - Gold bulls, having driven prices higher for four consecutive months, will learn in a week if December extends that streak. The verdict hinges on the Federal Reserve's upcoming rate decision—one of its most challenging of the year—market strategist Phillip Streible told Sputnik.
"Gold’s run for 2025 has been incredible with just a few stops, but like all markets that outperform, it’s bound to be hit by volatility if expectations are not met," Streible told Sputnik. "And the overwhelming expectation for December is that there will be another Fed rate cut. If that doesn’t happen, be prepared for downside that could even exclude December as a winning month." he added.
The Fed slashed rates by a quarter point in both September and October.
Markets now see an 89% chance of a third cut at the Fed's December 10 meeting, according to the CME's FedWatch Tool.
Despite these high odds, uncertainty remains over whether rising inflation will ultimately convince policymakers to hold steady at the current 3.75%-4% range.
"Gold is trading near all-time highs against almost every single currency," said Streible, the chief metals strategist at Chicago’s Blue Line Futures. "Therefore, that tells you that it’s seeing widespread adoption. Yet, volatility is something that cannot be discounted in the near-term. And that could be gold’s fate if the Fed doesn’t deliver a cut on the 10th."
Gold experienced its most pronounced volatility in October, shortly after hitting record highs for both futures ($4,398) and spot prices ($4,381.60).
Despite those price swings, the yellow metal managed to end October almost 4% higher, thereby extending a rally that began with an 11% surge in September and a 6% gain in August. In November, it climbed another 6%, buoyed by growing market speculation that the Federal Reserve will enact a third rate cut in December.
Year-to-date, both the futures and spot price gold are up about 61% each.
