Gold prices pushed higher on Wednesday, with spot and futures contracts trading near a two week high as traders doubled down on expectations that the US Federal Reserve could deliver its first rate cut in December. Softer than expected economic data weakened the dollar and nudged bond yields lower, instantly improving the appeal of non yield bearing assets such as gold.

Why gold is moving up
Fresh figures from the US economy pointed to cooling demand and a softer labour market, reinforcing the view that the Fed is now closer to easing rather than tightening. As markets moved to price in a December rate cut, yields on US Treasuries slipped and the dollar index gave back part of its recent gains. For many macro funds and private investors, that combination is a classic green light to add or rebuild gold exposure.

At the same time, physical demand has remained broadly supportive. Buying from Asia has picked up on price dips, while central banks in several emerging markets continue to diversify part of their reserves into bullion. Even modest additional demand can have an outsized impact when futures positioning is light and volatility is elevated.

Impact on currencies and risk assets
A stronger gold price and a weaker dollar tend to go hand in hand. As bullion moved higher, major currencies such as the euro, yen and some commodity linked units found room to recover against the greenback. Equity markets, especially in rate sensitive sectors, also reacted positively to the idea of earlier and possibly faster policy easing next year.

For forex traders, the current backdrop creates a more complex landscape. On the one hand, lower US yields reduce the carry advantage of dollar long positions. On the other, any surprise rebound in US data could quickly reverse the move and trigger a sharp correction in both gold and high beta currencies. Position sizing and clear risk limits therefore remain crucial.

What markets are watching next
In the coming days, attention will focus on the next round of US inflation readings, updated labour market indicators and fresh comments from Fed officials. A further run of weak data would strengthen the case for a December cut and could open the door to a test of recent record highs in gold.

By contrast, any upside surprise in growth or inflation could cool the rally and remind traders that the path to lower rates is rarely a straight line. For now, however, the balance of expectations has shifted in favour of bullion, with many desks treating gold as both a hedge against policy mistakes and a potential beneficiary of a gentler rate environment in 2026.