Gold Gains in Value Before Rising Interest Rate Expectations

Gold gained value for the second consecutive day as investors awaited the minutes from the latest Federal Reserve meeting. While this week sees a critical period for U.S. data, a survey also indicated that gold is among the favored assets for 2026.

As of today, despite fluctuations in national currencies and stock markets, gold has risen to around $4,090 per ounce, ending a three-day decline. The important earnings report from Nvidia Corp. set to be released this Wednesday is troubling investors regarding the overvaluations of AI-related stocks, representing the next test for the markets.

Gold price movements indicate that forced sales by leveraged investors in a volatile environment have been gradually absorbed by long-term investors and central banks. Ole Hansen, commodity strategy manager at Saxo Bank A/S, stated that this situation lays the groundwork for a new rally in 2026.

Gold has gained about 55% this year and is progressing towards its best year since 1979, even surpassing record levels in the last month. It is supported by increasing purchases from central banks and a demand for protection against account risks. Global investors expect gold to provide the second-best returns next year; only the Japanese Yen stands out as a better alternative among major global currencies.

On the other hand, the longest government shutdown in U.S. history has muddied investors' perspectives on the economy. In this uncertain environment, comments from several Federal Reserve policymakers have pressured rate cut expectations this week. Currently, the probability of a rate cut in December is assessed to be at a 50-50 level; just two weeks ago, the likelihood of a 25% cut was nearly certain.

On Thursday, the U.S. Bureau of Labor Statistics is expected to release the September employment report. Despite being historical data, expectations will provide significant insights into the condition of the world's largest economy following six weeks of shutdown.

Lastly, the minutes from the Federal Open Market Committee meeting held on October 28-29 are eagerly awaited. These minutes may contain information on when the balance sheet expansion process through reserve management purchases will begin. Increased liquidity in the financial system and loose monetary policy will positively impact precious metals.

According to recent data, the gold price reached $4,092.30 with a 0.6% increase as of 15:02 Singapore time. The Bloomberg Dollar Spot Index remained stable. Prices of silver, palladium, and platinum also showed an upward trend.