Gold Rises as Fed Grapples with Data-Starved December Rate Cut Decision

Gold prices surged to their strongest November performance in years, touching $4,120 per ounce, as investors recalibrated expectations for a Federal Reserve rate cut in December following a cascade of developments that reshaped market sentiment. The shift in positioning reflects a broader tug-of-war between optimism for monetary easing and uncertainty over the Fed's data-driven approach, with implications for global markets and asset allocations.

The catalyst for the recent volatility was the Bureau of Labor Statistics' announcement that October's employment report would be scrapped due to the government shutdown, delaying the release of November jobs data until after the Fed's December 2025 policy meeting. This development slashed the probability of a December rate cut from near 100% to 33%, according to CME FedWatch data, as traders lost a critical input for the central bank's decision-making calculus. The Fed's December meeting now hinges on real-time economic signals, with markets closely monitoring inflation trends and corporate earnings to gauge the Fed's path.

Gold's rally, meanwhile, has been fueled by a combination of central bank accumulation and speculative bets on lower borrowing costs. Analysts at JPMorgan and Goldman Sachs have projected gold reaching $5,055 per ounce by late 2026, citing sustained demand from central banks and the potential for a "neutral" policy stance from the Fed. Gold explorers, including Lake Victoria Gold and White Gold Corp., have also reported high-grade drilling results, reinforcing investor confidence in the metal's long-term fundamentals.

The Fed's policy uncertainty has spilled into other asset classes. Asian equities, which had rallied on earlier optimism for rate cuts, saw mixed performance as the delayed jobs data clouded the outlook. Japan's Nikkei 225 and Topix Index recovered from early losses, buoyed by a weaker yen and improving Sino-U.S. trade relations, while Chinese markets extended gains on stimulus hopes and liquidity injections from the People's Bank of China. In the U.S., equity futures dipped after the previous session's tech-driven rebound, underscoring the fragility of market sentiment ahead of the Fed's final meeting.

Adding to the uncertainty, Bank of America highlighted Kevin Hassett as a front-runner for the next Fed Chair, noting his alignment with President Trump's preference for lower rates. If appointed, Hassett's tenure could accelerate a shift toward accommodative policy in 2026, though analysts caution that the FOMC's composition and economic data will ultimately dictate the pace of rate cuts.

The Fed's December decision will also be influenced by geopolitical dynamics. While the U.S. and Ukraine reached a tentative agreement on a revised peace plan, Russia's intransigence-coupled with its desire to delay new oil sanctions has added complexity to the central bank's risk assessment. Meanwhile, China's semiconductor ambitions and the Sino-Dutch Nexperia dispute underscore the fragility of global supply chains, a factor the Fed may weigh as it balances inflation and growth.

Looking ahead, gold's trajectory will depend on the Fed's ability to navigate a data-starved December meeting. A surprise rate cut could push prices toward $5,000, while a pause might see the metal consolidate gains amid broader market volatility. For now, the interplay between delayed economic data, shifting Fed leadership expectations, and geopolitical tensions has created a high-stakes environment where gold's role as a safe haven remains firmly intact.