Fed Rate Cut Bets Push Gold to $4,139—Here's What the Economic Data Says

Gold had a stellar Tuesday, rallying $47.30 an ounce (1.16% gain) to hit $4,139.20 as markets zeroed in on fresh inflation readings and increasingly dovish signals from the Fed.

Silver wasn’t left behind, climbing 1.27% to $50.93 per ounce.

What moved the needle:

September’s Producer Price Index came in at +0.3% month-on-month—right on forecast but notably softer than expected on the core side (+0.1% vs. expectations). Year-over-year, PPI climbed 2.70%, suggesting inflation remains contained despite the ongoing trade tensions.

Retail sales? Modest 0.2% uptick in September after August’s 0.6% bump. Meanwhile, ADP employment data showed private employers cutting an average of 13,500 jobs weekly over the past four weeks—a significant jump from the previous 2,500 weekly decline. Translation: the labor market is cooling faster than expected.

The Fed angle:

Fed officials are clearly split, but the dovish camp is getting louder. Christopher Waller and Mary Daly both signaled openness to another quarter-point cut at December’s meeting. John Williams added that there’s “room for further adjustment” to bring rates closer to neutral.

CME’s FedWatch Tool is pricing in an 84.9% probability of a 25-bps cut on December 9-10—and that’s exactly why gold is having its moment. Lower rates = weaker dollar = bullish for gold.

The takeaway: Gold’s rally reflects a market now betting on a softer policy stance as growth concerns outweigh inflation worries.