On Monday (December 1), gold prices continued to rise as investors' expectations for a rate cut by the Federal Reserve this month intensified, with gold prices briefly reaching a six-week high. However, due to news from the Bank of Japan that triggered declines in U.S. stocks and cryptocurrencies, gold prices also experienced significant volatility, ultimately closing with a notable reduction in intraday gains.
What happened to gold prices?
FXStreet analyst Christian Borjon Valencia pointed out that on Monday, gold prices rose for the second consecutive trading day, briefly hitting a high of $4,264 per ounce, driven by the currency market's expectation that the Federal Reserve would cut rates next week. At the same time, a weaker dollar supported gold prices.
In the Asian market on Monday, spot gold prices briefly touched $4,205.39 per ounce, marking an intraday low. However, driven by the rising expectations of a Federal Reserve rate cut, gold prices subsequently continued to rebound.
During the early New York session, gold prices surged to $4,264.61 per ounce, the highest level since October 21.
The dollar fell to a two-week low, making gold relatively attractive to buyers holding other currencies.
David Meger, head of metals trading at High Ridge Futures, said, &#34;The market expects further rate cuts, coupled with inflation pressures still above the Federal Reserve's target, these factors remain fundamental support for gold.&#34;
However, influenced by the volatility of U.S. stocks, cryptocurrencies, and other assets, gold prices also experienced significant fluctuations, with prices retreating sharply from the aforementioned intraday high.
As of Monday's close, spot gold was reported at $4,232.10 per ounce, up 0.3% for the day.
Gold prices hit six-week high as Trump claims to have locked in successor for Fed Chair Powell
After a brief decline in the Asian market on Monday, spot gold prices surged, driven by rising market expectations for a Federal Reserve rate cut later this month, and reached a six-week high during the early New York session.
A series of dovish comments from Federal Reserve officials, along with weak economic performance following the U.S. government shutdown, have intensified market expectations that the Federal Reserve may cut rates again.
According to the CME Group's &#34;FedWatch&#34; tool, the market estimates the probability of a rate cut in December to be as high as 87%.
Generally, during periods of low interest rates and geopolitical tensions, non-yielding assets like gold tend to have a relative advantage.
U.S. President Trump stated on Sunday local time that after explicitly requesting his nominee to push for rate cuts, he has decided on the next Federal Reserve Chair and will announce this decision soon.
Trump has repeatedly criticized current Fed Chair Powell for failing to cut rates quickly and has expressed his desire for a chair who would more aggressively pursue rate cuts.
Sources told Bloomberg last week that Kevin Hassett, the director of the White House National Economic Council and Trump's chief economic advisor, is seen as a potential successor to Powell.
Notably, according to betting data from Kalshi predicting the market, Hassett's nomination probability currently stands at 64%, a significant increase from less than 40% last Tuesday
Informed sources say that Trump trusts Hassett and believes that he aligns with him in pushing the Federal Reserve to adopt more aggressive rate cuts. Hassett also stated that he would accept the position if invited.
Meger stated that the market expects the next Federal Reserve chair to be more dovish than ever, which also supports gold prices. &#34;We still believe that gold will be in a strong consolidation to upward trend.&#34;
Bank of Japan news triggers sharp declines in US stocks and cryptocurrencies, gold prices fluctuate violently
On Monday during the New York trading session, gold prices experienced violent fluctuations, hitting an intraday high of $4,264.61 per ounce before plummeting to around $4,219 per ounce, followed by a rebound, closing at $4,232 per ounce.
As cryptocurrencies resumed their downward trend and bond yields surged after the Bank of Japan signaled that it might tighten policy soon, US stocks closed lower on Monday.
The S&amp;P 500 index fell by 0.5%, while the tech-heavy Nasdaq 100 index dropped by 0.4%. Bitcoin fell below $86,000, dragging down major tokens, which in turn caused related stocks to decline.
Bank of Japan Governor Kazuo Ueda sent the clearest signal yet on Monday, suggesting that the policy committee might raise interest rates soon and emphasized the likelihood of action at the Bank of Japan's December meeting.
During a speech to local business leaders in Nagoya, Japan, Ueda stated that the central bank would weigh the pros and cons of raising policy interest rates by reviewing domestic and international economic conditions, inflation, and financial markets, and would make a decision at the appropriate time. He added that even if rates are raised, it would only be an adjustment to the degree of easing, as real interest rates remain at very low levels.
Ueda's remarks boosted market expectations for a rate hike by the Bank of Japan in December. Traders, following Ueda's speech on Monday morning, indicated that the probability of a rate hike at the Bank of Japan's next decision on December 19 is about 76%, significantly higher than last Friday's approximately 58%.
Matt Maley, chief market strategist at Miller Tabak + Co., wrote, &#34;The renewed decline in Bitcoin could pose some real problems for the stock market.&#34;
The Bank of Japan's hawkish stance also poses a challenge for gold. As a non-yielding asset, tightening policy by the central bank is unfavorable for gold.
Analysts noted that gold fell alongside US stocks, which may indicate that investors suffering losses in the stock market are eager to liquidate gold profits to offset their losses.
FXStreet analyst Christian Borjon Valencia pointed out that gold prices still lean towards the upside, but the central bank's tightening of monetary policy, especially after the Bank of Japan governor's remarks suggesting possible tightening, along with the divergence of opinions within the Federal Open Market Committee (FOMC), are the main risks to rising gold prices.
Valencia added that traders should be aware that potential solutions to the Russia-Ukraine conflict, led by the White House, could limit the rise in gold prices under significantly changing market sentiment
Gold Technical Analysis
Valencia stated that after decisively breaking through the $4,200 per ounce level, gold prices continue to rise, with the potential to test the November 13 high of $4,245 per ounce, followed by a push towards the $4,250 per ounce area. Momentum supports the bullish outlook, with the Relative Strength Index (RSI) rising, indicating that there is still room for further increases in gold prices.
Valencia pointed out that if gold prices break through $4,250 per ounce, they are likely to rise further towards $4,300 per ounce. Once this level is surpassed, the next resistance level will be the historical high of $4,381 per ounce.
<img src="https://imageproxy.pbkrs.com/https://static.fx168api.com/img/user/fa08addb600c393f00285af5bd49d864/0622/100195/image-1764615151784-1764615151784.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://static.fx168api.com/img/user/fa08addb600c393f00285af5bd49d864/0622/100195/image-1764615151784-1764615151784.jpg"/>
(Spot Gold Daily Chart Source: FXStreet)
Valencia added that on the downside, if gold prices fall below $4,200 per ounce, they may face initial support at the November 25 low of $4,109 per ounce, followed by the 20-day Simple Moving Average (SMA) at $4,089 per ounce

On Monday, gold prices rose to a six-week high due to increasing expectations of a Federal Reserve interest rate cut. News from the Bank of Japan led to declines in U.S. stocks and cryptocurrencies, causing significant fluctuations in gold prices. Spot gold closed at $4,232.10 per ounce, up 0.3%. The market anticipates an 87% probability of a Federal Reserve rate cut in December

The Federal Reserve and the Bank of Japan both announced major news! After gold prices soared to a six-week high, a "huge shock" occurred