Gold's December Rate Cut Hopes Just Got Dimmer

Gold took a hit on Thursday as traders are now seriously doubting whether the Fed will cut rates again in December. Front month gold futures dropped $21.20 (0.52%) to $4,056.50/oz, while silver fell even harder at 1.07%.

Here's what spooked the market:

September's job numbers came in hotter than expected—119K jobs added vs. 50K forecast. Sure, it's the biggest monthly jump in five months, but the unemployment rate also ticked up to 4.4%, sending mixed signals. For a Fed mulling December cuts, stronger jobs data = less urgency to ease.

The Fed's October minutes dropped yesterday, revealing serious internal drama. Two members voted against the recent 25bp cut—one wanted 50bp, the other wanted zero cuts. Chair Powell already warned that December cuts are "not a foregone conclusion."

The betting odds just shifted: CME's FedWatch Tool now shows only a 39.4% probability of a December cut, down from earlier expectations. Without rate cuts boosting non-yielding assets like gold, the yellow metal has less tailwind.

Bottom line: The Fed's next move hinges on data, and today's employment report just made December easier look less likely. Gold traders are pricing that in.