Gold prices on Tuesday plunged to their lowest levels in more than a week on diminishing hopes for an interest-rate cut at the Fed’s December meeting.
Gold futures dropped 0.3% to $4,062.20 per ounce as of about 12:30 p.m. ET — the fourth straight day of declines. The precious metal hit its lowest price since Nov. 10 earlier in the session.
The drop comes as traders are pricing in just 52.6% odds of a quarter-point cut next month – down from 93.7% odds this time last month, according to CME FedWatch.
“Market participants are pricing out US interest rate cuts following more hawkish comments from Fed officials,” UBS analyst Giovanni Staunovo said Tuesday.
“I would expect gold prices to bottom out soon, as I still see the Fed cutting rates several times over the coming quarters, and central banks’ diversification into gold remains strong.”
The US government reopened last week, ending its longest-ever shutdown at 44 days.
During the weeks-long pause, Fed officials were flying blind without access to government data like inflation and jobs reports, which are key to their decision-making process on interest rates.
Now investors are looking ahead to the release of Fed minutes on Wednesday, and the delayed September jobs report, which will come out Thursday.
While the non-farm payrolls data will be more backward-looking than usual, it will be one of the most significant clues into the health of the US economy in weeks.
Despite the upcoming data, several Fed officials have advocated for a slower rate-cutting pace – spooking investors who are eager for lower interest rates.
Fed Vice Chair Philip Jefferson said Monday that the central bank needed to “proceed slowly” on further cuts.
Gold previously gained more than 50% so far this year, on track for its best year since 1979 despite recent days’ declines.
Investors often turn to gold as a hedge against inflation and economic uncertainty, thanks to its capacity to hold value even as other assets fall.
Anxiety around Trump’s tariffs and their potential to cause inflation, stubbornly high interest rates, a weaker US dollar, the government shutdown and a slow labor market have all contributed to gold’s explosive rise this year. Elevated central-bank buying also added to gold’s increase.
“We still see a longer-term favourable fundamental backdrop for gold,” Julius Baer analyst Carsten Menke said Tuesday.
“The US economy continues to cool, US interest rates are set to fall and the US dollar should weaken as a result.”
Meanwhile, spot silver remained flat at $50.2 per ounce, platinum ticked up to $1,534.30 and palladium jumped 0.7% to $1,402.73.
With Post wires
