Gold surges above $4,150 amid Fed rate cut bets – Commerzbank

The price of Gold rose to $4,155 per troy ounce this morning. Since Friday afternoon, the price has risen by more than $100. The price increase was triggered by rising expectations of an interest rate cut at the Fed's next meeting in two weeks, Commerzbank's commodity analyst Carsten Fritsch notes.

Safe-haven demand supported by Ukraine war uncertainty

"Fed Funds Futures are now pricing in a 25 basis point interest rate cut by the US Federal Reserve with a probability of around 75%. Last Thursday, this had been only 30%. On Friday, the influential NY Fed President Williams expressed openness to an interest rate cut in December. Fed Governor Miran also expressed his willingness to vote for a 25 basis point cut in order to achieve a majority in the FOMC for such a move. The close ally of US President Trump was the only one to vote for 50 basis points at the last two meetings. Accordingly, the market now sees a greater probability of an interest rate cut."

"Developments over the past few days show that there is still a lot of movement possible in interest rate expectations until the Fed meeting on December 9/10, with corresponding effects on the Gold price. Another factor influencing the price of Gold is likely to be the ongoing negotiations to end the war in Ukraine. This could affect demand for Gold as a safe haven. Yesterday, the price temporarily fell in early trading due to hopes of an end to the war. Emerging doubts about this may have contributed to the price increase since then. We are therefore likely to see a few more volatile days ahead for Gold."