Gold prices fell in European trading on Friday, resuming losses after a brief rebound the previous day from a three-week low, as the metal once again traded below the $4,000 per ounce mark under pressure from a stronger US dollar across global markets.
The decline came after the Federal Reserve’s policy meeting this week delivered a more hawkish tone than markets had expected, reducing the likelihood of another rate cut in December following two consecutive 25-basis-point reductions.
Despite today’s weakness, gold remains on track to post a third consecutive monthly gain, supported by persistent safe-haven demand amid heightened global political and trade tensions.
Price overview
• Gold prices fell 0.9% to $3,989.27 per ounce, after opening at $4,024.67 and hitting a session high of $4,046.35.
• On Thursday, the metal rose 2.4%, snapping a four-day losing streak, as it rebounded from a three-week low of $3,886.64.
US dollar
The US Dollar Index hovered near a three-month high around 99.72 points on Friday, reflecting continued strength in the greenback against major and minor peers.
The dollar’s gains have been supported by renewed safe-haven buying following the Fed’s hawkish stance this week, which increased doubts about further monetary easing or rate cuts.
Sentiment was also buoyed by signs of easing trade tensions between the United States and China after Presidents Donald Trump and Xi Jinping met in South Korea and agreed to a temporary trade truce aimed at reviving negotiations.
Federal Reserve
As widely expected, the Fed cut interest rates by 25 basis points on Wednesday to 4.00%, the lowest since November 2022, marking its second consecutive cut this year.
The decision was backed by a majority of FOMC members, with two dissenters — Steven Miran, who favored a 50-basis-point cut, and Jeffrey Schmid, who preferred no change.
The policy statement noted slower job growth and a slight rise in unemployment while emphasizing that the labor market remains relatively tight. It also said economic activity continues to expand at a moderate pace and that inflation remains elevated compared with earlier this year.
Jerome Powell
Fed Chair Jerome Powell said Wednesday that another rate cut in December “is far from a given,” adding that policymakers hold “sharply divided views” on the path forward.
Powell acknowledged rising tensions in money markets in recent weeks and said the Fed has been managing liquidity conditions carefully. He emphasized that the central bank is relying on all available data — including private surveys and sector data — as official government reports remain unavailable due to the ongoing shutdown.
He described the current situation as “complex,” noting that the economy is caught between the risks of persistently high inflation and a weakening labor market, and said current policy remains “moderately restrictive.”
Interest-rate outlook
According to CME’s FedWatch Tool, market pricing for a 25-basis-point rate cut in December has fallen from 99% to 70%, while the probability of holding rates steady rose from 1% to 30%.
Monthly performance
• For October, gold is still up around 3.5%, on track for a third straight monthly gain.
• Earlier this month, the metal hit an all-time high of $4,381.73 before entering a broad correction and profit-taking phase.
Market outlook
Tim Waterer, chief market analyst at KCM Trade, said: “Powell’s tone was notably hawkish this week, which hasn’t been favorable for gold.”
He added that “the December rate-cut outlook now looks far less certain, boosting the dollar’s strength and complicating gold’s near-term appeal.”
SPDR Gold Trust
Holdings at the SPDR Gold Trust, the world’s largest gold-backed ETF, rose by 4.3 metric tons on Thursday to 1,040.35 metric tons — their highest level since October 24.
