Gold Prices Surge to Six-Week Peak Amid Market Uncertainty
Gold prices climbed to their highest level in six weeks on Monday, December 1, as investors sought safety amid a sell-off in equity markets and a declining U.S. dollar. The precious metal's rally was further supported by growing expectations of an interest rate cut by the U.S. Federal Reserve later this month.
Precious Metals Shine as Dollar Weakens
Spot gold increased by 0.2% to reach $4,240.54 per ounce, marking its highest point since October 21. U.S. gold futures for December delivery showed even stronger momentum, gaining 0.5% to settle at $4,276.00. The rally was particularly spectacular in silver, which jumped 2% to $57.48 per ounce after earlier hitting an unprecedented all-time high of $57.86.
The U.S. dollar's decline to a two-week low made dollar-priced bullion more affordable for international buyers, creating favorable conditions for precious metals. According to the CME FedWatch tool, market participants are now pricing in an 87% probability of a rate cut in December, following dovish comments from Federal Reserve officials and softer economic data.
Risk-Off Sentiment Drives Safe-Haven Demand
"There's a risk-off session in S&P futures, which are down 0.8% in line with a sell off in major cryptocurrencies," explained Kelvin Wong, senior market analyst at OANDA. "This has created a positive feedback loop into gold as a safe haven asset play in today's much more thinly traded session."
U.S. stock futures declined during Asian trading hours, while cryptocurrencies experienced significant losses. Bitcoin fell 3.6% to $87,881.82, and ether dropped 5% to $2,871.59, further highlighting the shift toward traditional safe-haven assets.
Recent comments from Federal Reserve Governor Christopher Waller and New York Fed President John Williams have reinforced market expectations for monetary policy easing. Adding to this sentiment, White House economic adviser Kevin Hassett, considered a frontrunner for Fed Chair, stated he would accept the position if appointed by President Donald Trump and shared the administration's view that interest rates should be lower.
Markets are now awaiting the release of core U.S. Personal Consumption Expenditures figures on Friday, which will provide additional clues about the Federal Reserve's policy direction. Lower borrowing costs typically benefit non-yielding assets like gold and silver.
Among other precious metals, platinum rose 1.3% to $1,694.70, while palladium gained 2.1% to $1,482.45. Wong noted that silver's exceptional performance was partly driven by thin liquidity conditions resulting from last week's CME outage, rather than fundamental factors alone.
