Gold hit its highest level in nearly three weeks on Tuesday, driven by growing expectations of a Federal Reserve rate cut next month and signs of an end to the historic US government shutdown.
According to Reuters, spot gold rose 0.7% to USD 4,142.83 an ounce by Tuesday morning, the highest since 24 October. The rise came after the US Senate on Monday evening voted 60–40 to pass a funding bill that restores government funding and ends the 41-day federal shutdown — the longest in US history.
Market optimism favours gold
Ilya Spivak, head of global macro at Tastylive, said: “The news of the shutdown ending removed a kind of uncertainty and let markets return to one of this year’s most important speculative narratives. The market’s direction through the end of the year still favours higher prices.”
Expectations of a Fed rate cut
According to the CME FedWatch tool, traders see a 64% chance of a 25-basis-point cut in December. Fed governor Stephen Miran said on Monday that a 50-basis-point cut in December would also be “appropriate” as inflation is falling and unemployment rising.
Recent economic data support a cut
In October the US economy lost jobs — particularly in government and retail — and consumer confidence fell to a three-and-a-half-year low in early November. In such conditions, non-yielding gold tends to perform better during periods of low interest rates and economic uncertainty. With the shutdown nearing its end and rate-cut odds rising, gold again shone as a safe haven against economic volatility and reached a three-week high.
