Gold Takes a Hit: Fed's December Rate Cut Odds Just Got Much Slimmer

Gold’s losing streak continues. Front-month Comex gold dropped $21.20 to $4,056.50/oz (-0.52%), while silver got hammered harder, falling 1.07% to $50.25/oz. The culprit? Markets are basically saying ‘forget about another Fed rate cut in December.’

Here’s what spooked traders:

September nonfarm payrolls came in hot at +119K jobs (vs. expected +50K), marking the biggest monthly gain in five months. Sure, unemployment ticked up to 4.4% from 4.3%, and wage inflation stayed flat at 3.8%, but the jobs surprise was enough to kill rate-cut momentum.

The Fed itself is sending mixed signals. After the October 29 rate cut (25 bps to 3.75%-4.00%), FOMC minutes revealed sharp divisions in the room—two members actually voted against it. Powell explicitly said another December cut is “not a foregone conclusion.” Translation: don’t count on it.

The math is brutal: CME FedWatch Tool now shows only a 39.4% probability of a 25-basis-point cut at the December 9-10 meeting. That’s a significant pullback from where expectations were just days ago.

Why gold’s sweating: Lower interest rates = more demand for non-yielding assets like gold. Fewer rate cuts = higher opportunity cost of holding the shiny stuff. Until the Fed signals more cuts or growth concerns resurface, gold bulls might have to wait it out.