By Milad Azar, Market Analyst at XTB MENA
Gold retreated slightly on Thursday, and could consolidate just below a two-week high, with some investors opting to lock in gains after the recent rally. Even so, the broader backdrop remains supportive, with markets still expecting the Federal Reserve to deliver a final rate cut in December and to begin a more extended easing cycle in 2026. Current pricing implies an 85% probability of a 25-basis-point reduction next month, alongside expectations for three additional cuts next year.
This week’s data did little to shift rate expectations, as investors continue to view the labour market as gradually softening after months of mixed signals. The possibility of a more dovish shift at the central bank has also drawn attention after President Trump’s top economic adviser emerged as a leading candidate for the Fed’s leadership, reinforcing rate cut bets.
At the same time, persistent geopolitical risks continue to underpin the metal. In the Middle East, tensions remain elevated despite intermittent diplomatic efforts, while in Eastern Europe, limited progress toward a ceasefire has not eased concerns around regional stability. Heightened frictions between China and Japan have also weighed on risk sentiment, adding another layer of support for safe-haven demand.