Gold prices experienced a downturn as several Federal Reserve policymakers have hesitated to commit to another interest rate reduction in December. This stance has bolstered the US dollar, which is currently trading near its highest level in several months. Bullion prices edged lower, nearing $US3,980 an ounce, after fluctuating on Monday.
Federal Reserve Governor Lisa Cook acknowledged the increased risk of labour-market weakness outweighing inflation concerns, yet stopped short of guaranteeing a rate cut in December. Her remarks mirrored similar sentiments expressed by colleagues Mary Daly and Austan Goolsbee. The price of gold had previously surged to a record high mid-month before declining, fueled by concerns that its rapid ascent was unsustainable.
Market participants are closely monitoring signals to determine if the upward trend in gold prices will resume. The Federal Reserve’s monetary policy plays a crucial role, as looser policies in the US generally make non-yielding assets like gold more appealing. The Fed is scheduled to convene next month for its last policy meeting of the year, following two recent rate cuts.
According to Kyle Rodda, an analyst at Capital.com, there is a possibility that the Fed may attempt to temper expectations for further rate cuts. This could potentially drive yields and the dollar higher, exerting downward pressure on gold prices. As of 9.27 am in Singapore (12.27pm AEDT), bullion was trading 0.5 per cent lower at $3,981.86 an ounce.
