Gold retreats from six-week high on Tuesday

Gold fell to $4,210 per ounce on Tuesday as investors locked in profits after prices touched a six-week high in the previous session, with markets increasingly confident that the Federal Reserve will cut interest rates next week.

Traders currently assign an 88% probability to a 25bps reduction at the upcoming meeting, a view supported by a growing stream of soft US economic data and dovish comments from several Fed officials in recent days.

Monday’s release showed the US manufacturing sector contracting for the ninth straight month in November—the fastest pace of decline in four months—highlighting persistent weakness in industrial activity.

The downturn in new orders and continued pressure on production have added to signs that the broader economy is losing momentum, bolstering expectations that the Fed may need to step in with additional support.

Market participants are now awaiting remarks from Fed Chair Jerome Powell later today, which could offer important signals on the central bank’s policy stance heading into year-end. Any acknowledgment of deteriorating economic conditions or heightened downside risks could reinforce bets on a deeper easing cycle.

Later in the week, attention will shift to the November ADP private-sector employment figures and the delayed September PCE inflation data, both of which are expected to play a key role in shaping market expectations for future rate moves.

With gold on track for one of its strongest annual performances in decades, traders remain highly sensitive to shifts in the interest-rate outlook, which continues to be the primary driver of bullion sentiment.