Gold Soars As Rate Cut Expectations Firm Up Amid Inflation Data

(RTTNews) - Gold prices surged on Tuesday as investors parsed today's U.S. economic data amid dovish comments by Fed officials in the past few days that raises expectations of a rate cut by the U.S. Federal Reserve.

Front Month Comex Gold for November delivery jumped by $47.30 (or 1.16%) to $4,139.20 per troy ounce.

Front Month Comex Silver for November delivery rose steeply by $63.90 cents (or 1.27%) to $50.934 per troy ounce.

Today in the U.S., the Bureau of Labor Statistics revealed producer prices rose by 0.3% in September (matching forecasts) after edging down by 0.1% in August. On an year-on-year basis, producer prices increased 2.70% in September.

The Producer Price Index (PPI) is a key indicator for inflation, and today's number shows a stable inflationary environment in the backdrop of the ongoing tariff war.

Month-on-month core producer prices, which exclude food and energy, edged up by 0.1% (softer than expected) and were up 2.9% year-over-year.

In addition, the Commerce Department said retail sales rose 0.2% month-over-month in September following a 0.6% increase in August.

Technically, the September PPI reading, being a delayed release, is outdated for calculations, although it could still serve as a comparative reference.

According to an ADP report released today, private employers in the U.S. eliminated an average of 13,500 jobs per week for the four weeks ending November 8, an increase from the 2,500 weekly decline in the previous period.

Federal Reserve officials are divided on their stance on an additional rate cut before the end of this year, with the Fed having already cut rates twice this year.

Weighing that inflation is not as bad as expected and pricing in that the labor market is soft and continuing to weaken, Fed Governor Christopher Waller on Monday advocated for another quarter point rate cut at the Fed's next policy meeting in December.

San Francisco Fed President Mary Daly also favors lowering rates, as she sees the deterioration in the job market as harder to manage than a flare-up in inflation.

Last Friday, New York Fed President John Williams had stated that there is room for further adjustment in the near-term to bring the benchmark rates closer to neutral.

The Conference Board's Consumer Confidence Index fell to 88.7 from a revised 95.5 (from 94.6) halting the previous recovery.

According to CME Group's FedWatch Tool, investors are betting on an 84.9% chance of a 25-basis-point interest rate cut at the Federal Reserve's December 9-10 meeting.

As expectations of a rate cut rose, the yellow metal gained on the upside.