Fed's December Rate Cut Odds Keep Shrinking—Here's What Gold Traders Need to Know

Gold just caught a bid but still couldn’t hold ground. November Comex gold dropped $21.20 to $4,056.50/oz (-0.52%), while silver got hit harder, sliding 1.07% to $50.25/oz.

The culprit? Rate cut hopes are evaporating. Investors are now pricing in only a 39.4% probability of another 25-basis-point cut from the Fed in December, down from earlier expectations. Jerome Powell’s recent comment that December’s cut is “not a foregone conclusion” is finally sinking in.

What Just Spooked the Market

Today’s employment data painted a mixed picture:

• Non-farm payrolls surged 119k in September (vs. 50k expected)—biggest jump in 5 months
• But unemployment ticked up to 4.4% from 4.3%
• Wage inflation stayed flat at 3.8%
• Jobless claims fell to 220k

The Fed’s October meeting minutes revealed sharp divisions among policymakers. Two members voted against the October cut: one wanted 50 bps instead of 25 bps, the other wanted rates frozen entirely.

Why This Matters for Gold

Higher rates = lower gold demand (gold doesn’t yield interest). With rate cuts off the table, gold loses its bullish narrative. The current Fed rate sits at 3.75%-4.00% after that October 29 cut.

Bottom line: Unless December’s labor data tanks, the Fed’s likely staying put. That’s bearish for non-yielding assets like gold.