Gold prices fell in European trading on Friday, extending losses for a second consecutive session and nearing a weekly decline, pressured by the strong performance of the US dollar in the foreign-exchange market amid fading expectations for a Federal Reserve rate cut in December.
Minutes from the Fed’s latest policy meeting reduced the likelihood of continued monetary easing, and investors are now awaiting key US sector data later today to reassess those expectations.
Price overview
•Gold today: spot gold fell 1.2% to 4,029.36 dollars, down from the opening level of 4,077.27 dollars, after hitting an intraday high of 4,088.83 dollars.
•On Thursday, gold settled down by less than 0.1%, marking its first loss in three sessions, weighed by a stronger US dollar.
Weekly performance
So far this week—ending with today’s settlement—gold prices are down roughly 1.5%, on track for a fourth weekly decline in five weeks.
US dollar
The dollar index traded on Friday near a two-week high, reflecting continued strength in the US currency and putting it on course for its largest weekly gain in six weeks.
Investors continue to favor the dollar as the most attractive asset at the moment amid mounting uncertainty over whether the Federal Reserve will proceed with a rate cut in December.
Federal Reserve
Minutes from the FOMC meeting on October 28–29, released Wednesday in Washington, showed that “many” policymakers opposed a rate cut at that meeting.
The minutes indicated that many participants believe the target range for the federal funds rate is likely to remain unchanged through year-end based on their economic projections.
However, some members noted that an additional cut in December “could be appropriate” if economic data evolves broadly in line with expectations ahead of the next meeting.
US interest rates
•Fed Vice Chair Philip Jefferson said Monday that the central bank needs to “proceed slowly” with any further rate reductions.
•Chicago Fed President Austan Goolsbee reiterated Thursday that he is “uncomfortable” with rushing into a rate cut, especially as progress toward the 2% inflation target has slowed and started to move “in the wrong direction.”
•Following the minutes and recent remarks, CME’s FedWatch tool showed rate-cut odds for December falling from 48% to 30%, with odds of no change rising from 52% to 70%.
•The delayed US nonfarm payrolls report—postponed due to the government shutdown—showed the economy added 119,000 jobs in September, more than double the expected 50,000.
•The stronger-than-expected jobs report reinforced expectations that the Fed will refrain from cutting rates in December.
•Investors now await key US economic releases later today, covering major “industrial–commercial” sector activity for November, to reassess the outlook.
Gold outlook
Brian Lan, managing director at Singapore-based GoldSilver Central, said gold is currently in a consolidation phase: the dollar has strengthened meaningfully, and uncertainty persists over whether the Fed will move ahead with additional rate cuts.
Lan added: “The market seems unsure, especially as we approach year-end. We expect many traders to lock in profits, and we’ve already seen that trend from late last week through this week.”
SPDR Gold Trust
Holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, fell by 4.29 metric tons on Thursday, bringing total holdings down to 1,039.43 metric tons—the lowest level since November 11.
