Rate Cut Expectations Dominate, Clear Dovish Direction

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Policy Perspective: Rate Cut Expectations Dominate, Clear Dovish Direction
Market expectations for a 25-basis-point Fed rate cut in December have surged to 87%, with core support coming from weak U.S. economic data and dovish remarks from officials.
While some hawkish officials emphasize that "inflation remains above the 2% target," cooling labor market signals — such as the unexpected decline of 32,000 in November ADP employment (the largest drop since March 2023) — and slowing economic growth have strengthened the need for accommodative policies.
From a capital pricing perspective, rate cut expectations have pushed U.S. Treasury yields lower and dragged down real U.S. dollar interest rates, significantly reducing the opportunity cost of holding gold. As an interest-free asset, gold’s allocation value in a low-interest-rate environment continues to stand out, attracting capital inflows from bond and money markets.
The key focus next week will be Fed officials’ speeches ahead of the FOMC meeting (scheduled for December 10). If no unexpected hawkish comments emerge, rate cut expectations will further solidify, providing policy support for gold to break through. Conversely, signals of a "pause in rate cuts" may trigger a short-term pullback, but the strong support around $4,170 is likely to absorb selling pressure.

Gold trading strategy for next week
buy：4180-4190
tp:4200-4220-4250
sl:4170

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