Gold climbs back to $4,200 as Fed cut bets rise – HSBC

FXStreet Insights Team FXStreet

Gold is holding near $4,200/oz as expectations for a December Fed rate cut and a weaker US Dollar (USD) continue to underpin prices, though soft physical demand may cap further gains. Strong official-sector buying and political noise from Italy’s proposal to alter central bank gold ownership add new dynamics to an already firm gold market, HSBC' analysts report.

Softer USD and risk aversion fuel bullion strength

"Gold prices have recently returned to around $4,200 per ounce, underpinned by increased risk aversion and growing expectations of a 25bp rate cut by the Federal Reserve (Fed) at its 9-10 December meeting."

"The recent weakness in the broad USD − reflected by the US Dollar Index (DXY) falling below 99 − has further supported Gold prices, given their typically inverse relationship. However, with markets having largely priced in the anticipated rate cut, any subsequent decline in the USD is expected to be modest. While Gold’s upward momentum remains intact, our precious metals analyst notes that a lack of improvement in physical demand may constrain further near-term gains."

"Meanwhile, official sector demand for Gold remains strong. The World Gold Council reports that central banks purchased a net 53 tonnes of Gold in October, marking the highest monthly increase this year and a 36% rise from September. Nonetheless, potential changes are on the horizon, as the Italian government considers amending the ownership structure of central bank Gold reserves. Previous attempts to transfer these reserves to the Treasury have faced resistance from EU authorities."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD gains traction near 0.7100 as the post-Fed USD rally pauses

AUD/USD finds fresh buyers and retakes 0.7100 in the Asian session on Thursday as the US Dollar pauses its hawkish Fed-inspired rally to its highest level since late July. However, RBA rate-hike bets and hopes for US-Iran diplomatic efforts lift risk sentiment and support the risk-sensitive Australian Dollar and the major.

USD/JPY reverses a dip below 156.00 as focus shifts to BoJ

USD/JPY is reversing a brief dip below 156.00 in the Asian session on Thursday, looking to snap a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to seven-week highs, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This keeps the pair's upside limited, with the focus now shifting to the BoJ policy decision due on Friday.

Gold extends fragile recovery from multi-week low as softer bond yields weigh on USD

Gold builds on its intraday ascent through the first half of the European session, and recovers further from a near six-week low, touched the previous day. A modest pullback in US Treasury bond yields prompts some US Dollar profit-taking, which is seen offering support to the commodity. However, the Federal Reserve's hawkish outlook, along with escalating Middle East tensions, should limit deeper losses for the safe-haven Greenback and cap the non-yielding bullion.

Ripple, Cardano, Dogecoin: Downside risk looms amid market uncertainties

Top altcoins, including Ripple (XRP), Cardano (ADA), and Dogecoin (DOGE), face imminent downside risk as prevailing upside momentum recedes toward neutral.

The Fed hawkishly hiked rates

The Fed proceeded with its first rate hike since 2023, as was widely expected. It should be noted that the bank hiked rates against US President Trump’s wishes. It’s characteristic that Fed Chair Warsh stated that 'Inflation is too high and has been for too long’, signalling his hawkish intentions.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.