Gold slips below $4,000 as strong dollar and waning rate-cut expectations weigh on demand
Gold prices retreated below the $4,000 per ounce mark once again on Tuesday, pressured by a stronger U.S. dollar and diminished expectations of another Federal Reserve interest rate cut in December. The easing of trade tensions between the United States and China further curbed safe-haven demand for the precious metal.
Spot gold dipped 0.2 percent to $3,992.23 an ounce by 03:43 GMT, while U.S. gold futures for December delivery slipped 0.3 percent to $4,001.40 an ounce.
The U.S. dollar remained near a three-month high, supported by the Federal Reserve’s cautious stance on monetary easing. Traders have scaled back expectations for further rate cuts after Fed Chair Jerome Powell said last week that another cut in 2025 was “not a given.”
According to the CME FedWatch Tool, market expectations for a December rate cut have fallen to 65 percent, down sharply from over 90 percent before Powell’s comments.
“The strength of the dollar is a thorn in the side of gold, as traders reassess the likelihood of another rate cut by year-end,” said Tim Waterer, Chief Market Analyst at KCM Trade.
Gold, which yields no income, tends to perform better in environments of low interest rates and economic uncertainty, as investors seek alternative stores of value.
Markets are now awaiting key U.S. economic data, including the ADP employment report, for fresh indications on the Federal Reserve’s policy direction. “If we see another weak ADP reading, that could give gold a foothold to start a recovery,” Waterer added.
Despite the recent pullback, gold remains up 53 percent since the start of the year, although it has fallen more than 8 percent from its record high reached on October 20.
In global trade developments, U.S. President Donald Trump announced last week that Washington had agreed to reduce tariffs on Chinese goods in exchange for concessions from Beijing, a move that eased some investor anxiety.
Among other precious metals, silver rose 0.1 percent to $48.12 an ounce, platinum added 0.1 percent to $1,566.60, while palladium declined 1 percent to $1,430.31.
