Gold prices held steady on Tuesday after a nearly 2% rise in the previous session, as the increasing probability of a U.S. rate cut in December balanced out the dollar’s strength. Spot gold saw a decrease of 0.2%, trading at $4,132.20 per ounce, as of 0107. Bullion rose by 1.8% on Monday, hitting $4,139.80, the highest point since November 14. Gold futures in the U.S. for December delivery rose by 0.7%, hitting $4,049.50 per ounce.
The dollar stayed robust close to the six-month highs achieved last week, leading to a rise in the cost of gold priced in dollars for those holding other currencies. On Friday, John Williams, President of the New York Federal Reserve, suggested that U.S. interest rates could lower “in the near term” without compromising the Fed’s inflation goals, while also offering a protective measure against a possible decline in the labor market. Investors are currently assigning an 81% probability to a Federal Reserve rate cut in December, up from 79% the previous day and 40% a week ago, according to the reports. Gold, known for not generating interest, often shows strong performance in settings with low interest rates.
Nonetheless, other Fed members have maintained a hawkish stance. Dallas Fed President Lorie Logan supported keeping the policy rate steady, while the Fed presidents from Chicago and Cleveland warned that additional rate cuts at this time could present considerable risks to the economy. Investor attention this week focuses on important economic data that was delayed due to the government shutdown, including U.S. retail sales, jobless claims, and producer price figures, which will offer additional insight into the Federal Reserve’s path concerning rate cuts.
On the geopolitical front, U.S. and Ukrainian officials engaged in discussions on Monday aimed at reconciling their differences regarding a plan to conclude the conflict in Ukraine, following an agreement to amend a U.S. proposal that was viewed by Kyiv and its European allies as aligning with Kremlin interests. Elsewhere, spot silver declined by 0.3% to $51.24 per ounce, platinum increased by 0.4% to $1,550.10, while palladium experienced a slight decrease of 0.1% to $1,393.66.