Gold Approaches Historic Highs Amid Rate Cut Bets and Rising Geopolitical Risks

Gold prices rose above $4,320 per ounce during trading on Wednesday, testing levels close to historic peaks last recorded in October, as investors continue to bet on further monetary easing from the Federal Reserve next year.

This increase was driven by additional signs of a slowing U.S. labor market, with data showing the unemployment rate rising to 4.6% in November, the highest level since 2021, along with wage growth slowing to its weakest pace in over two years.

These indicators have bolstered market expectations for up to two rate cuts in 2026, as markets are currently pricing in about 59 basis points of monetary easing next year.

Investors are now focused on U.S. inflation data for November, with the Consumer Price Index (CPI) set to be released on Thursday, followed by the Personal Consumption Expenditures (PCE) index on Friday, in an effort to gain clearer signals regarding price pressures and monetary policy.

Alongside monetary factors, gold has also received additional support from renewed geopolitical tensions, following U.S. President Donald Trump's decision to impose a complete blockade on oil tankers subject to sanctions linked to Venezuela, following previous seizures and an increased U.S. military presence in the region.

These developments have contributed to heightened demand for safe-haven assets, partially offsetting the relative easing of risks associated with progress in peace talks between Russia and Ukraine.