Gold prices surged to $4,114 per ounce on Wednesday, extending gains for a second consecutive session as investors rushed toward safe-haven assets. The precious metal climbed $46.32, or 1.14 percent, driven by persistent weakness in US employment data and renewed speculation that the Federal Reserve might deliver another interest rate cut in December.
In India, gold prices in Delhi jumped Rs 1,500 to Rs 1,27,300 per 10 grams, tracking the international rally. Silver also reversed a three-day losing streak, bouncing back to Rs 4,000 to Rs 1,60,000 per kilogram.
The sharp moves reflected growing anxiety among traders about economic stability and the direction of monetary policy heading into year-end.
What Sparked the Latest Gold Price Rally
The catalyst for Wednesday's rally emerged from labor market data showing continued softness in US employment conditions.
Initial jobless claims rose to 232,000 in the week ending October 18, exceeding market expectations, while continuing claims increased to 1.9 million.
These figures suggested the American labor market faced mounting pressure despite earlier optimism about economic resilience.
Saumil Gandhi, Senior Analyst for Commodities at HDFC Securities, noted that gold advanced on renewed safe-haven demand while persistent weakness in the labor market kept expectations for a potential rate cut alive.
Investors viewed the employment data as confirmation that Federal Reserve officials might need to provide additional monetary support sooner than previously anticipated, triggering a flight to traditional safe assets.
Did you know?
Central banks purchased over 1,000 tonnes of gold annually in 2024 and 2025, representing approximately 30 percent of global mine production and marking the highest sustained institutional buying since the 1960s.
How Weak Labor Data Changed Market Sentiment
The employment figures represented more than isolated data points, instead revealing a broader cooling trend in the world's largest economy.
Jobless benefit rolls in mid-October reached their highest levels since August, according to delayed Labor Department releases.
This sustained weakness contrasted sharply with earlier projections that the labor market would remain tight throughout 2025.
Praveen Singh, Head of Commodities at Mirae Asset Sharekhan, observed that spot gold traded above $4,084 as investors awaited Federal Open Market Committee minutes from the October meeting.
The minutes, scheduled for release Wednesday evening, would provide critical insights into how Fed officials viewed the balance between inflation concerns and employment risks.
Market participants hoped the document would clarify whether policymakers leaned toward additional easing.
Are Federal Reserve Officials Signaling a December Cut
Federal Reserve Governor Christopher Waller delivered notably dovish commentary that amplified speculation about a December rate cut. Speaking on November 16, Waller described the US labor market as weak and near stall speed, arguing that a 25 basis point rate cut in December would provide additional insurance against further deterioration.
His comments represented the most explicit support for near-term easing from a Fed official in recent weeks.
However, not all policymakers shared Waller's urgency. Richmond Fed President Thomas Barkin highlighted balanced risks between inflation and employment, suggesting the central bank faced no clear imperative to act immediately.
This divergence within Fed ranks created uncertainty about the outcome of the December meeting.
According to the CME FedWatch Tool, markets assigned just 46.6 percent probability to a December rate cut, down sharply from nearly 67 percent a week earlier.
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What Central Bank Buying Means for Gold Demand
Beyond short-term trading dynamics, structural demand from central banks continued to support gold prices throughout 2025. Consistent buying by monetary authorities helped stabilize the market even during periods of volatility.
According to the World Gold Council, overall gold demand rose 10% in the first three quarters of 2025, fueled by strong investment inflows and persistent central bank accumulation.
Institutional buyers purchased over 1,000 tonnes annually, marking an unprecedented stretch of sustained buying.
Kaynat Chainwala, AVP and Analyst for Commodities Research at Kotak Securities, noted that gold recovered from a one-week low to settle above $4,065 per ounce, supported by softer employment data and caution ahead of delayed macro releases.
Central bank accumulation created permanent supply removal from commercial markets, establishing progressively higher price floors as institutional holdings grew over time.
This buying pattern differed fundamentally from cyclical investment demand that returned to markets during corrections.
Where Could Gold Prices Head From Here
Analysts pointed to multiple factors that could sustain gold's momentum into early 2026. JPMorgan research suggested gold prices could reach $5,000 per ounce by 2026, representing a potential 25 percent increase from current levels around $4,114.
The projection incorporated expectations for continued central bank buying, ongoing geopolitical tensions, and potential additional Fed rate cuts beyond December.
However, near-term price action remained vulnerable to shifts in the probability of rate cuts. If upcoming economic data showed labor-market stabilization or inflation reacceleration, traders might further reduce expectations of a December cut, potentially pressuring gold lower.
Conversely, additional weakness in employment or softer inflation readings could push rate cut odds back above 50 percent, providing fresh upside momentum for precious metals.
The interplay between Federal Reserve policy signals, labor market trends, and structural institutional demand will determine whether gold extends its rally or consolidates recent gains.
With FOMC minutes due for release and additional economic data scheduled before the December meeting, volatility appears likely to persist.
For investors seeking portfolio protection amid economic uncertainty, gold's combination of safe-haven appeal and central bank support continues to offer compelling diversification benefits, even amid short-term price fluctuations.
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