Gold prices declined in European trading on Tuesday for the first time in three sessions, pulling back from their six-week high as corrective moves and profit-taking picked up, alongside pressure from a recovering US dollar against a basket of global currencies.
Despite strong expectations for a US rate cut in December, investors are awaiting several key economic releases from the United States this week, which are likely to guide the Federal Reserve’s policy outlook.
Price overview
• Gold today: Prices fell 0.95% to $4,191.85 from an opening level of $4,231.75, after touching an intraday high of $4,236.02.
• Gold settled Monday up 0.35%, marking a second consecutive daily gain and hitting a six-week high at $4,264.60 an ounce amid strong safe-haven demand.
US dollar
The US Dollar Index rose about 0.1% on Tuesday, attempting to recover from a two-week low and heading for its first gain in seven sessions, reflecting a rebound in the greenback against major and minor currencies.
Beyond dip-buying, the dollar’s recovery comes as markets speculate that Federal Reserve Chair Jerome Powell will remain cautious about aggressively easing monetary policy and cutting interest rates.
US interest rates
• Kevin Hassett, now seen as the leading contender to replace Jerome Powell as Fed Chair, said interest rates “should be lower.”
• According to the CME FedWatch Tool, the probability of a 25-basis-point US rate cut in December is steady at 87%, while the likelihood of no change in rates is stable at 13%.
• To reassess these probabilities, investors are closely monitoring this week’s US economic releases, particularly data on private-sector employment and the personal consumption expenditures index—the Fed’s preferred inflation gauge.
Gold outlook
Tim Waterer, chief market analyst at KCM Trade, said: “Gold is underperforming today, but the broader picture remains intact—a picture that includes expected US rate cuts, which should support gold from a yield perspective.”
SPDR Gold Trust
Holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, rose by 4.58 metric tons on Monday, bringing total holdings to 1,050.01 metric tons—the highest since 22 October.
