Gold Rally Builds as Fed Cut Odds Hit 89% and Markets Brace for Key Data
Gold edged higher on Wednesday as traders increased their conviction that the Federal Reserve is preparing to trim interest rates...
Quick overview
- Gold prices increased as traders anticipate a potential interest rate cut by the Federal Reserve, with an 89% probability now projected for December.
- Recent economic indicators suggest a slowing economy, prompting analysts to support a favorable outlook for gold as real yields are expected to decline.
- Central banks significantly increased gold purchases in October, indicating strong demand for defensive assets amid market uncertainty.
- Technically, gold is forming a symmetrical triangle pattern, with a potential breakout on the horizon depending on upcoming price movements.
Gold edged higher on Wednesday as traders increased their conviction that the Federal Reserve is preparing to trim interest rates, with upcoming US economic releases expected to shape the central bank’s tone next week. Futures markets now point to an 89 percent probability of a cut at the December meeting, up from 85 percent a week earlier, according to CME’s FedWatch tool. It’s a shift driven by a steady flow of softer economic indicators, from manufacturing to labor conditions, suggesting the economy is losing pace.
This recalibration comes after a brief round of profit-taking earlier in the week, when some investors shifted into equities and crypto. For many, that repositioning was temporary. “We’ve seen some profit-taking for gold and moves into crypto or equity, so we should see a return… especially with high chances of a rate cut as we approach the end of the year,” said Brian Lan, managing director at GoldSilver Central.
With real yields likely to decline under an easier policy path, analysts note that the backdrop remains broadly supportive for non-yielding assets like gold.
Soft Data Reinforces Easing Outlook
Investors will closely monitor upcoming releases, Wednesday’s November ADP employment figures and Friday’s delayed September PCE Index. The PCE measure remains the Fed’s preferred inflation gauge and may ultimately determine whether policymakers accelerate the pace of cuts into early 2026.
Major brokerages have raised their odds of an easing at the December 9–10 meeting, citing weakening demand and easing price pressures. Manufacturing activity, for instance, continues to contract, reflecting deteriorating momentum in sectors sensitive to tighter credit conditions.
While broader risk appetite has steadied, demand for defensive exposure remains intact. Central banks purchased 53 tons of gold in October, a 36 percent month-on-month increase, marking the strongest accumulation since early 2025, according to the World Gold Council.
Technical View: Gold Coils for a Breakout
Gold is tracking inside a symmetrical triangle, with price repeatedly rejecting the descending trendline near $4,265 while respecting higher lows along the rising trendline from late October. This tightening structure suggests an approaching breakout.
The 20-EMA is acting as a short-term pivot, with price trading just above it, while the 50-EMA reinforces the broader upward bias. Momentum is balanced: the RSI at 53 signals neutrality, consistent with traders waiting for a catalyst.
Recent candles show long upper wicks near resistance, evidence of supply and fading intraday strength. Initial support sits at $4,185, followed by a deeper zone at $4,130, where buyers may attempt to defend trend structure. A decisive close above the triangle’s upper boundary would indicate bullish continuation, while a break below the rising trendline would warn of a sentiment shift.
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