Fed Rate Cut Bets Mount as Gold Poised to Resume Upward Trajectory

TradingKey -The U.S. labor market continues to show signs of weakness, with hiring conditions deteriorating over the past several weeks. Half of the Federal Reserve’s 12 regional banks reported declining employer hiring appetite in their latest surveys. This softening labor backdrop is fueling investor expectations for another Fed rate cut, with markets increasingly pricing in a 25-basis-point reduction in December.

Gold prices have recently resumed an upward trajectory amid the shifting monetary outlook, rising within a consolidating range and approaching $4,200. With momentum building, the precious metal could re-energize its rally and set sights on the historic high of $4,380.

The Federal Reserve's latest Beige Book report showed that employers in half of its 12 districts reported declining hiring appetite. Recent challenges, including the concluded government shutdown and the growing adoption of artificial intelligence, are adding pressure to the job market outlook.

Last Thursday, the U.S. Bureau of Labor Statistics released delayed employment data showing that nonfarm payrolls surged by 119,000 in September—far exceeding the consensus forecast of 50,000. However, the unemployment rate rose from 4.3% in August to 4.4%, the highest level since 2021. Additionally, job gains for July and August were revised down by a combined 33,000 positions.

Federal Reserve Governor Stephen Miran said Tuesday that the U.S. economy “needs a significant rate cut” to bring monetary policy back toward neutral, warning that current rates are too restrictive, artificially elevating unemployment and hindering economic growth.

John Williams, New York Fed President and a key figure at the central bank, said Friday that the Fed remains able to cut interest rates in the near term without jeopardizing its inflation target.

According to CME Group’s FedWatch Tool, markets now assign an 84.7% probability to a 25-basis-point rate cut in December, up sharply from around 30% just one week ago, while the odds of holding rates steady stand at 15.3%.

JPMorgan economists have updated their forecast, now expecting the Federal Reserve to cut interest rates next month (December). This marks the bank’s second rate projection adjustment within a week. JPMorgan predicts 25-basis-point cuts in both December and January 2026.

Earlier this week, Goldman Sachs also projected that the Fed will deliver its third consecutive rate reduction at the December meeting. The firm believes that moderating inflation and a cooling labor market are creating room for policymakers to further ease monetary policy.

JPMorgan analysts forecast that gold prices could rise to $4,500 per ounce by mid-2026, reaching an average of $5,055 per ounce by the fourth quarter of 2026.

Goldman Sachs recently raised its gold price target, setting a forecast of $4,440 per ounce for Q1 2026. For the fourth quarter of 2026, the bank increased its outlook from a previous $4,900 to $5,055 per ounce.

Source: Mitrade — Gold Price Action

Technically, gold prices have been rising within a consolidation range in recent days, extending the rebound pattern seen since early November. The metal appears poised to resume its upward trend. On the daily chart, gold has broken above the upper boundary of a multi-week triangle formation, signaling that bullish momentum is regaining control. The KD indicator shows both lines above 50 and trending higher, indicating strengthening buying pressure that could continue to lift prices.

On the upside, initial resistance is seen at $4,250, followed by $4,350 as the next major barrier. A more critical resistance level lies at $4,350. On the downside, initial support is at $4,050, with further support at $3,950 and stronger support at $3,850.