Precious Metals Find Support as Rate Cut Quotes Peak Amid Technology Sector Turmoil

Bullish expectations for additional Federal Reserve rate cuts are propelling gold and silver prices higher, even as the broader markets grapple with mounting concerns over an artificial intelligence sector bubble.

On Friday, Front Month Comex Gold for November delivery climbed by $20.20, or 0.50%, to settle at $4,076.70 per troy ounce. The weekly performance, however, remained modest with prices declining just $10.90 (0.27%) per troy ounce. Meanwhile, Front Month Comex Silver for November delivery retreated by 37.40 cents (0.74%) to $49.873 per troy ounce, posting a steeper weekly loss of 71.70 cents (1.42%).

Economic Data Fuels Rate Cut Speculation

The driving force behind gold’s resilience stems from shifting market expectations following a series of mixed economic releases. Yesterday’s U.S. non-farm payroll report delivered an intriguing contradiction—employment rose by 119,000 jobs in September (compared to consensus forecasts of 50,000), yet the unemployment rate climbed to 4.4% from 4.3% in August. Annual wage inflation remained anchored at 3.8%, while initial jobless claims for the week ending November 15 slipped by 8,000 to 220,000, with the four-week moving average settling at 224,250.

Traders remain skeptical about the significance of these employment figures, given that they arrive during a delayed reporting cycle following the longest government shutdown in U.S. history. New York Federal Reserve President John Williams reinforced dovish expectations on Friday, indicating the central bank retains room to reduce rates in coming weeks without compromising its inflation mandate.

Market quotes now reflect this optimism decisively. According to CME Group’s FedWatch Tool, the probability of a quarter-point rate cut at the December Federal Reserve meeting surged to 73.5% from 39.1% just one day earlier, underscoring how quickly rate cut expectations have shifted.

Mixed Activity in Broader Economic Indicators

The latest purchasing managers’ data painted a nuanced picture of economic momentum. The S&P Global Composite PMI advanced to 54.80 points in November from 54.60 in October, suggesting ongoing expansion. The services sector performed well, with its PMI rising to 55.0, while the manufacturing gauge retreated to 51.9—the weakest reading in four months—indicating emerging softness in industrial activity.

Inflation expectations showed an encouraging retreat. University of Michigan consumers unexpectedly revised their one-year inflation outlook down to 4.5% from 4.7%, hinting that persistent price pressures may be easing.

AI Sector Doubts Bolster Safe-Haven Demand

Beyond the monetary policy landscape, precious metals have benefited from heightened apprehension surrounding valuations in the technology sector. Despite blockbuster earnings results from AI bellwether Nvidia, investors are increasingly questioning the underlying economics of artificial intelligence investments championed by tech majors. The sheer scale of capital expenditures and the uncertain timeline for profitability have sparked a reassessment of technology stocks, prompting capital flows into traditional safe-haven assets like gold and silver.

This convergence of accommodative rate cut expectations combined with legitimate concerns about technology sector overvaluation has created a supportive backdrop for gold prices heading forward.