Gold Rallies As Traders Bet On A Fed Rate Cut

Gold nears record highs after a CME outage, with investors increasingly expecting the Fed to cut rates at its December meeting.

What’s going on here?

Gold is edging back toward record highs as CME Group’s exchanges come fully back online and traders step up bets that the Federal Reserve will cut interest rates at its December meeting.

What does this mean?

After a Thursday evening data center outage halted electronic trading on CME Group exchanges, February gold futures reopened stronger on Friday – up $8.70 at $4,211 an ounce once service was fully restored at 8:30 a.m. eastern time. That leaves the metal only about 3% below its October 20 record of $4,359.40, wrapping up a 5.5% gain over the past month. The latest upswing is tightly tied to shifting expectations for Federal Reserve policy: CME’s FedWatch Tool now puts the odds of a December rate cut at 86.9%, up from 71% just a week earlier. Lower interest rates typically dull the appeal of cash and short-term bonds versus yield-free gold, giving the metal a leg up. And because the ICE dollar index is actually a bit firmer at 99.65 and Treasury yields are holding steady – with the two-year note near 3.49% and the ten-year just under 4% – it looks like changing policy expectations, not financial stress, are driving this move.

Why should I care?

For markets: Gold is front running the Fed’s next step.

Gold’s 5.5% climb over the past month is a clear hint that traders see a genuine shift toward easier policy taking shape. An implied near-87% chance of a December rate cut means looser money is already baked into prices, which can eventually give a lift not just to gold but to a wider set of riskier assets too. Meanwhile, steady two- and ten-year Treasury yields around 3.5% to 4% suggest bond markets aren’t bracing for a nasty recession, more a gentle drift to lower rates. If the Fed does follow through, interest-sensitive areas like real estate and growth stocks could get support from cheaper borrowing, while plain cash might start to look less compelling by comparison.

The bigger picture: Gold is hinting at lower real rates ahead.

A gold price hovering just shy of record territory above $4,200 an ounce sends a strong message about how investors see inflation, growth, and central bank policy lining up. A likely rate cut signals that the Fed feels more comfortable with inflation’s downtrend and is ready to ease off the brakes. But steady demand for a non-yielding store of value also shows that investors still want insurance against long-term currency erosion or policy missteps. With the dollar index near 99.65 and long-term yields around 4%, markets look to be settling into a world of lower real rates, where hard assets and solid dividend payers could take on a bigger role in portfolios around the globe.

Past performance is not indicative of future results.

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Originally Posted November 28, 2025 – Gold Rallies As Traders Bet On A Fed Rate Cut