Gold and Copper Advance as Fed Interest-Rate Cut Hopes Grow

GC=F +0.45% SI=F +1.71% HG=F -0.19%

(Bloomberg) -- Gold and copper advanced on rising expectations of further monetary easing by the Federal Reserve. Silver also surged.

Dovish comments from policymakers since last week have revived bets on a December rate cut. The latest US jobless claims data — which showed applications for US unemployment benefits unexpectedly fell last week to the lowest since mid-April — is seen as unlikely to derail the Fed from delivering a rate cut next month.

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Reinforcing prospects for lower rates, a key economic adviser to Donald Trump is emerging as the frontrunner to be the next Fed chair and is considered to be someone who would bring the president’s approach to monetary policy. Gold typically benefits when rates are low, as it doesn’t pay interest.

Swap traders now see nearly 80% chance of a Fed quarter-point cut next month and favor three more by end-2026. A week ago, traders expected only three cuts in total.

Gold has consolidated above the $4,000-an-ounce threshold after retreating from last month’s peak above $4,380 an ounce. The metal — on track for its best annual performance since 1979 — has risen more than 55% this year, boosted by central-bank purchases and strong retail demand on the back of the so-called debasement trade, where investors avoid sovereign debt and currencies.

Deutsche Bank raised its 2026 forecast for gold to an average of $4,450 an ounce over the year, up from $4,000 previously. Goldman Sachs last month boosted its projection for the end of next year to $4,900 an ounce from $4,300, citing ETF inflows and central-bank buying.

“The positive structural picture shows inelastic demand from central banks and ETF investment diverting supply from the jewelery market,” Deutsche analyst Michael Hsueh wrote in a note Wednesday.

Hsueh also said third-quarter supply-demand data supports continued central bank buying, and that the most recent pullback suggests that a $3,900-an-ounce support will hold.

Spot gold rose  to $ an ounce as of  in New York. The Bloomberg Dollar Spot Index slipped . Silver advanced , while platinum and palladium also gained.

Copper traded on the London Metal Exchange gained  to settle at $ a metric ton. Most other industrial metals rose.

--With assistance from Preeti Soni, Yihui Xie and Jack Ryan.

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