On Monday, spot gold staged a strong rebound, jumping 1.7% in a single session – the biggest one-day gain in nearly two weeks – and successfully holding above the key psychological level of $4,100.
Dovish voices are rising within the Federal Reserve. The probability of a December rate cut has surged from 40% last week to 81%. The market’s repricing of easier monetary policy expectations has become the dominant driver behind the latest spike in gold prices. At the same time, renewed tensions in the Russia-Ukraine conflict are once again providing a safe-haven premium for gold. With these dual tailwinds, gold bulls are back in force.
Christopher Waller, long known as the Fed’s “super hawk,” made a rare dovish turn. Speaking on Fox Business, he stated clearly that with the labor market continuing to soften, there is ample justification for another 25-basis-point cut at the December 9–10 meeting. Although September non-farm payrolls increased by 119,000, beating expectations, this figure is very likely to be revised lower, while the unemployment rate has already risen from 4.3% to 4.4% with no sign of a rebound.
The market is increasingly convinced that a Fed rate cut in December is a near certainty. Against the backdrop of falling real interest rates and moderate inflation expectations, the appeal of gold as a zero-yield asset has been fully re-energized.
Because the earlier U.S. government shutdown forced the postponement of a raft of key data releases, this week will see a dense “catch-up” data window. The market broadly expects these figures to be weak or at least not significantly above expectations. Once the data confirm a cooling economy and contained inflation pressures, a December rate cut will be effectively locked in and may even pave the way for another cut in January 2026.
Soft data and moderate inflation together point to a potentially strong performance for gold. Even if stronger-than-expected data were to trigger renewed hawkish concerns and cause a short-term pullback in gold, the window for any meaningful, trend-based short positions has largely closed.
In addition, geopolitical risks have suddenly re-emerged. In the early hours of Tuesday, Kyiv issued an emergency air-raid warning as Russian forces launched a mixed attack using drones, cruise missiles, ballistic missiles and hypersonic missiles, putting the whole of Ukraine on high alert.
Market Analysis:
On the 4-hour chart, gold has successfully broken above and stabilized above the $4,100 round number. Short-term moving averages are in a bullish alignment, while the MACD lines and histogram are expanding above the zero line. If expectations for a Fed rate cut continue to build alongside geopolitical tensions, the odds of a breakout above $4,200 – and even a challenge of the $4,300 record high – are rising quickly.
