Federal Reserve Rate Cut Pushes Gold to Seven-Week Highs

TLDR

• Gold prices reached a near two-month high of $4,343.62 per ounce as the US dollar weakened following less hawkish Federal Reserve signals
• The Fed cut interest rates by 25 basis points to 3.50%-3.75% and announced plans to buy $40 billion in short-dated Treasuries monthly starting December
• Silver prices remained near record highs at $62.98 per ounce while platinum rose 1.8% to $1,781.09 per ounce
• Markets await delayed US nonfarm payrolls data for October and November on Tuesday and November CPI data on Thursday
• A mass shooting at Bondi Beach in Sydney killed at least 16 people, described as a targeted attack on the Jewish community, boosting safe-haven demand for gold

Gold prices climbed to near two-month highs on Monday as the US dollar weakened following recent Federal Reserve decisions. Spot gold rose 1% to $4,343.62 per ounce in Asian trading.

The precious metal extended gains from the previous week when it hit seven-week highs. Gold futures for March increased 1.1% to $4,375.80 per ounce.

The Federal Reserve made its third and final rate cut of 2025 last week. The central bank reduced interest rates by 25 basis points to a target range of 3.50% to 3.75%.

The Fed also announced it would begin buying short-dated Treasury securities in December. The purchases will total $40 billion per month.

Treasury Purchases Support Gold Rally

The Fed’s asset buying activities present a dovish outlook for monetary policy. Lower interest rates reduce the opportunity cost of holding gold, which pays no yield.

Markets are pricing in a 76% probability that the Fed will hold rates steady in January 2026. This compares to a 70% chance before the December rate cut announcement.

Silver prices remained close to record levels reached last week. Spot silver rose 1.6% to $62.98 per ounce on Monday.

Platinum also gained ground in metal markets. Spot platinum increased 1.8% to $1,781.09 per ounce.

Key Economic Data Coming This Week

Traders are focused on two key US economic indicators this week. The nonfarm payrolls report for October and November will be released Tuesday.

The report was delayed due to a long-running government shutdown. The shutdown lasted through October and November.

Consumer price index inflation data for November is due Thursday. Both reports will factor into the Fed’s outlook on future interest rate decisions.

Markets will watch for signs of easing labor market growth and cooling inflation. These two factors are the Fed’s biggest considerations for cutting interest rates.

The data will be the most recent official economic readings available after the shutdown disrupted several October prints. The employment report will include nonfarm payrolls, average hourly earnings and unemployment rate.

Some Fed officials offered hawkish remarks last week despite the rate cut. Chicago Fed President Austan Goolsbee said he would have preferred to wait for more information before cutting rates again.

Cleveland Fed President Beth Hammack stated the central bank should keep rates high enough to continue putting downward pressure on inflation. Fed Governor Stephen Miran and New York Fed President John Williams are scheduled to speak Monday.

Safe-Haven Demand Increases

A mass shooting at Bondi Beach in Sydney killed at least 16 people and wounded 40 on Sunday. Australian Prime Minister Anthony Albanese called it a “targeted attack” on the Jewish community.

Gold price holds above the key 100-day Exponential Moving Average on technical charts. The 14-day Relative Strength Index stands above the midline near 68.75.

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