Gold Prices Decline: Dollar and Interest Rate Expectations Are Effective

The Decline in Gold Prices Continues

As of Tuesday, gold prices have decreased to $4,035 per ounce following consecutive losses. This decline is attributed to a strong dollar and a diminishing likelihood of an expected interest rate cut next month.

US Gold Futures

December delivery US gold futures were set at $4,037.50, down 0.9%. The dollar remains stable against other currencies after registering a sharp rise in previous sessions.

The Impact of Economic Data

Last week, the US government reached a compromise in the legislature to end the longest shutdown in its history. The lack of official economic data weakened the expectations for another interest rate cut from the Federal Reserve (Fed) in December.

Investor Expectations

Investors are pricing the likelihood of a quarter-point interest rate cut by the Fed next month at 43%, down from 50% the previous week. Fed Vice Chairman Philip Jefferson stated in a recent announcement that the central bank should “proceed slowly” with further rate cuts, thereby dampening market expectations.

Comments from Fed Officials

Fed Governor Chris Waller expressed his support for a rate cut next month and stated that he is more concerned about the weakening labor market than accelerating inflation.