Gold prices saw a slight decline on Thursday, influenced by the strengthening dollar and diminished expectations regarding a potential Federal Reserve rate cut in December. Investors were also preparing for the upcoming U.S. jobs report.
As of 0305 GMT, spot gold was down 0.1%, trading at $4,077.13 per ounce, while U.S. gold futures for December delivery fell by 0.2% to $4,075.80 per ounce. Analysts cited the recent reduction in rate-cut expectations as a significant factor impacting gold’s performance. Kelvin Wong, a senior market analyst at OANDA, noted that the decline reflects a notable shift in traders’ outlook over the past two weeks.
Wong indicated that in the current short-term landscape, gold prices are likely to remain below the $4,100 threshold, with resistance noted at $4,155. He projected that gold could potentially trade closer to the $4,000-$3,980 range if the trend continues.
The dollar index reached a peak not seen in over two weeks against its competitors, effectively increasing gold’s cost for foreign currency holders. Minutes from the Fed’s October meeting, released on Wednesday, indicated that, while interest rates were cut, officials warned about the risks associated with maintaining such a policy amid persistent inflation and public trust concerns.
Traders are currently assessing a decreased likelihood for a rate cut at the Fed’s December 9-10 meeting. The probability stands at approximately 33%, down from 49% the previous day, according to the CME Group’s FedWatch tool. Typically, non-yielding gold performs better in low-interest-rate environments and during periods of economic uncertainty.
The upcoming September U.S. non-farm payrolls report has taken on heightened significance, delayed due to the recent government shutdown. Economists surveyed by Reuters project that employers added around 50,000 jobs during this period, which could influence future Fed policy decisions.
In related market movements, the Gold Trust, which is the world’s largest gold-backed exchange-traded fund, reported an increase in its holdings by 0.22%, rising to 1,043.72 tonnes from 1,041.43 tonnes the previous day.
In other precious metals, spot silver saw a 0.2% increase to $51.44 per ounce, platinum rose by 0.9% to $1,559.54, and palladium gained 1.1%, reaching $1,395.37. As market participants await further economic indicators, the interplay between currency strength and precious metals remains a focal point for investors.
