Gold prices rose in European trading on Monday at the start of the week, supported by psychological buying around the $4,000 per ounce level. Gains, however, remained limited as the US dollar extended its rally to a three-month high against a basket of major currencies.
More hawkish remarks from several Federal Reserve officials have dampened expectations for a rate cut in December, as markets await fresh economic data from the United States later this week.
Price Overview
• Gold prices rose 0.65% to $4,028.04 per ounce, up from an opening of $4,002.40, after touching a session low of $3,964.63.
• On Friday, gold fell 0.6%, resuming losses that had paused the day before amid a brief rebound from a three-week low of $3,886.64.
• For October, gold gained 3.75%, marking its third consecutive monthly increase and a new all-time high of $4,381.73 per ounce, driven by safe-haven demand.
US Dollar
The US dollar index rose 0.2% on Monday, extending its gains for a fourth straight session to reach a two-month high of 99.92 points, reflecting continued strength in the greenback.
The dollar’s advance was fueled by renewed demand as a preferred investment, particularly after growing uncertainty about whether the Federal Reserve will deliver another rate cut in December.
US Interest Rates
• Dallas Fed President Lorie Logan said Friday that the Fed should not have lowered rates at its most recent meeting.
• Cleveland Fed President Beth Hammack also opposed last week’s rate cut.
• Atlanta Fed President Raphael Bostic stated Friday that a December rate cut is “not a given.”
• Following these remarks, CME’s FedWatch tool showed market odds of a 25-basis-point rate cut in December falling from 70% to 63%, while expectations for holding rates steady rose from 30% to 37%.
• Investors are closely watching upcoming US economic data and further Fed commentary to reassess these probabilities.
Outlook for Gold
Kelvin Wong, senior market analyst for Asia-Pacific at OANDA, noted that “gold lacks upside momentum due to certain technical factors, while the US dollar remains resilient, weighing on bullion.”
He added that “safe-haven demand has eased at this stage as trade tensions between the US and China have subsided.”
SPDR Gold Trust
Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined by 1.15 metric tons on Friday, bringing total holdings to 1,039.20 metric tons.
