Gold Surges as Investors Anticipate Fed Rate Cut

Gold prices climbed Monday as traders bet on the Federal Reserve cutting interest rates this week. The weakening dollar made gold cheaper for buyers using other currencies, pushing spot gold up 0.3% to $2,206.99 per ounce by early trading.

But December futures contracts told a different story, falling 0.2% to $2,236.30 per ounce. This split between spot and futures prices often signals market uncertainty about timing.

The dollar's weakness is the main driver here. It's hovering near six-week lows hit on December 4th, which makes dollar-priced gold more attractive to international buyers. When the dollar drops, gold typically rises since it becomes a cheaper alternative for investors holding euros, yen, or other currencies.

Here's why this matters for markets: Rate cuts usually weaken the dollar and boost gold prices. Gold doesn't pay interest, so when rates fall, the opportunity cost of holding it shrinks. Investors start viewing it as a better store of value compared to bonds or savings accounts.

Other precious metals showed mixed results. Silver held steady at $31.25 per ounce, while platinum gained 0.3% to $946.56. Palladium bucked the trend, dropping 0.5% to $955.55 per ounce.

The timing is significant. Fed meetings often create volatility in precious metals markets, and this week's decision could set the tone for gold's direction through year-end. If the Fed delivers the expected cut, gold could extend its gains. But any hawkish signals about future policy might reverse Monday's momentum quickly.