Gold experienced a decline on Thursday as the dollar strengthened, with investors evaluating policy indications from the Federal Reserve and Chair Kevin Warsh. This movement followed the central bank’s decision to maintain interest rates and in anticipation of significant US inflation data scheduled for release later in the day. Spot gold declined by 0.7% to $4,039.26 per ounce as of 0044, whereas US gold futures for December delivery remained stable at $4,051.00. The dollar maintained its strength, resulting in higher costs for bullion priced in greenbacks for those holding alternative currencies. The Fed held rates steady on Wednesday as anticipated, choosing to postpone any adjustments to borrowing costs until after next week’s US midterm elections while it seeks additional data on inflation, which the central bank indicated “remains elevated.”
Traders are currently assigning approximately a 78% probability to a rate hike in December, a decrease from the 84% likelihood observed prior to the announcement, as indicated by the CME’s FedWatch Tool. Elevated interest rates heighten the opportunity cost associated with holding non-yielding bullion, thereby diminishing its attractiveness to investors. Markets are anticipating the release of the Personal Consumption Expenditures data scheduled for 1230, a crucial indicator monitored by the Federal Reserve in its pursuit of a 2% inflation target. The European Central Bank is poised to maintain its current interest rates on Thursday, a decision that has been clearly communicated in advance. However, this announcement is expected to be eclipsed by ongoing concerns regarding the bond-market instability in France.
According to the World Bank’s report on Wednesday, global commodity prices are projected to increase by 23% in 2026. This forecast is attributed to escalating energy prices and interruptions in cargo shipping due to the ongoing conflict in the Middle East, challenges in grain shipments from the Black Sea, and heightened demand for safe-haven assets like gold. In September, China’s net gold imports through Hong Kong experienced an increase exceeding 28% compared to August, reaching a five-month peak, according to data released by the Hong Kong Census and Statistics Department on Wednesday.
On the geopolitical front, Yemen’s Houthis launched an attack on Aden airport on Wednesday, according to Yemeni government forces. This development follows a warning from the Iran-aligned group for individuals to evacuate the facility as hostilities intensified in the impoverished nation, which is entangled in the broader Middle East conflict. Spot silver declined by 0.7% to $53.60 per ounce, while platinum experienced a decrease of 0.3% to $1,533.50. In contrast, palladium saw an increase of 0.7%, reaching $1,017.29.
