Fed Cut Odds Lift Gold; India Surges, China Slows!

Introduction

Gold climbed to multi-week highs this week as growing expectations of a U.S. Federal Reserve rate cut collided with divergent physical demand trends in Asia. Macro signals from Fed officials, hefty flows into Indian bullion, and a marked pullback in Hong Kong-linked Chinese shipments combined with significant institutional accumulation have made the past seven days unusually active for bullion traders and physical market participants.

Fed rate-cut signals: the immediate price driver

Comments from Federal Reserve officials and updated market pricing sharply increased the likelihood of an imminent rate easing, a classic bullish input for gold. The CME FedWatch tool showed the probability of a December cut climbing into the 80%-plus range, and spot bullion responded — briefly trading above $4,150 per ounce and touching roughly $4,156. In a higher-yield environment gold tends to underperform; when rate-cut odds rise, the opportunity cost of holding non-yielding assets like gold falls, providing an immediate catalyst for price gains.

What traders did this week

• Price action: Spot gold recorded weekly gains, moving to levels not seen since mid-November.
• Futures flows: COMEX volumes rose with one session showing nearly 369,000 contracts traded, while open interest contracted by tens of thousands of contracts, indicating profit-taking and position rotations after the rally.

Asia demand split: India’s rebound vs. China’s slowdown

Physical fundamentals diverged sharply across two of the world’s largest bullion consumers. India’s imports surged — October arrivals reached about 165 tonnes, reflecting strong seasonal demand from weddings and festivals as well as renewed investor interest. Over the April-to-October window Indian imports nearly matched last year’s totals, signaling resilient domestic appetite despite elevated prices.

China’s Hong Kong route weakens

By contrast, China’s net gold imports via Hong Kong fell sharply in October, down roughly 64% month-on-month to a little over 8 tonnes. That drop partly reflects a combination of very high international prices, new local tax treatments introduced by Beijing in November and the presence of other channels for mainland demand (Shanghai flows are not included in the Hong Kong numbers). The result: while central bank buying in China continues at the margin, consumer and industrial purchases softened.

Institutional and non-traditional buyers reshape flows

Beyond central banks, large non-traditional investors have left a clear footprint on bullion markets this year. Notably, the cryptocurrency issuer Tether has accumulated a sizable gold position — reported holdings reached the order of 116 tonnes as of the end of Q3. Those purchases, when aggregated with official-sector buying, materially supported price rallies earlier in the year and have become an unexpected source of demand volatility.

Russia’s tactical gold operations

Russia has also been adjusting how it uses gold within its reserves and sovereign funds. The National Wealth Fund has moved to hold a substantial share of assets in gold alongside foreign-currency allocations, and domestic gold operations have reportedly increased. These policy shifts are aimed at preserving budgetary liquidity and insulating reserves from external pressures, and they alter the effective supply available to international markets.

What this mix means for near-term prices

The confluence of elevated Fed easing expectations, strong Indian physical demand, cooling Chinese imports via Hong Kong, and outsized institutional accumulation creates both upside pressure and complexity. In the near term, gold’s trajectory will likely remain tied to the timing and clarity of Fed communications and U.S. economic data. If rate-cut odds remain high or rise further, bullion is positioned to test higher resistance levels. Conversely, any unexpected firming in U.S. macro data or hawkish Fed commentary could trigger rapid profit-taking, especially given recent drops in futures open interest.

Conclusion

This week’s action underlines that gold is moving for a mix of monetary-policy expectations and concrete shifts in physical flows. India’s import rebound is lending a solid demand base, while China’s reduced Hong Kong-linked shipments and strategic accumulation by large institutions and sovereign entities are changing the supply-demand balance. Traders and investors should watch Fed pronouncements, Indian seasonal demand metrics, and official-sector disclosures closely — these items are the clearest near-term signals for bullion direction.

Data points referenced include FedWatch probability shifts, spot levels above $4,150/oz during the week, India’s October imports near 165 tonnes, China’s Hong Kong net imports of about 8 tonnes in October, reported institutional holdings around 116 tonnes, and COMEX volume/open-interest movements in recent sessions.