Gold prices fell more than 1 per cent on Tuesday as the dollar hit three-month highs, while traders awaited U.S. economic data for clues on the Federal Reserve's monetary policy path. Spot gold was down 1.5 per cent to $3,940.75 as of 2:15 p.m. (ET). U.S. gold futures for December delivery eased 1.3 per cent to settle at $3,960.50.
The dollar index traded at three-month highs, making gold more expensive for other currency holders. "With the dollar making new highs, we're seeing that having a weight on the gold market ... some of this recent strength in dollar and the weight in the gold market comes from the less likelihood of a potential (Fed) rate cut in December," said David Meger, director of metals trading at High Ridge Futures.
Although the U.S. central bank cut interest rates last week, Fed Chair Jerome Powell suggested the reduction in borrowing costs might be the last of the year. Traders now see a 71 per cent chance of a rate cut at the Fed's December 9-10 meeting, compared with more than 90 per cent a week earlier, CME Group's FedWatch tool showed.
Non-yielding gold thrives in a low-interest-rate environment and during times of economic uncertainty.
With the U.S. government shutdown likely to become the longest ever, halting the release of government data, investors are focusing more closely on non-official economic reports, including the ADP National Employment Report. ADP's report for October is due to be released on Wednesday.
Remarks from Fed officials have highlighted differing perspectives on how to address the current data gap.
Bullion, which has gained 53 per cent this year, has dropped by more than 9 per cent from its record high on October 20.
"Gold is losing some froth while still pricing in concerns over Fed independence and the possibility of stagflation as well as underlying geopolitical risk and international tensions. Some of the froth has been blown off in a much-needed correction," Rhona O'Connell, an analyst at StoneX, said in a note.
Spot silver was down 1.5 per cent at $47.32 per ounce, platinum eased 1.8 per cent to $1,538.05, and palladium fell 3.1 per cent to $1,400.30.
Q1. How has silver performed?
A1. Spot silver was down 1.5 per cent at $47.32 per ounce, platinum eased 1.8 per cent to $1,538.05, and palladium fell 3.1 per cent to $1,400.30.
Q2. How does gold perform during low-interest rate?
A2. Non-yielding gold thrives in a low-interest-rate environment and during times of economic uncertainty.
Why is Gold Price Down?
The dollar index traded at three-month highs, making gold more expensive for other currency holders. "With the dollar making new highs, we're seeing that having a weight on the gold market ... some of this recent strength in dollar and the weight in the gold market comes from the less likelihood of a potential (Fed) rate cut in December," said David Meger, director of metals trading at High Ridge Futures.
Although the U.S. central bank cut interest rates last week, Fed Chair Jerome Powell suggested the reduction in borrowing costs might be the last of the year. Traders now see a 71 per cent chance of a rate cut at the Fed's December 9-10 meeting, compared with more than 90 per cent a week earlier, CME Group's FedWatch tool showed.
Non-yielding gold thrives in a low-interest-rate environment and during times of economic uncertainty.
With the U.S. government shutdown likely to become the longest ever, halting the release of government data, investors are focusing more closely on non-official economic reports, including the ADP National Employment Report. ADP's report for October is due to be released on Wednesday.
Remarks from Fed officials have highlighted differing perspectives on how to address the current data gap.
Bullion, which has gained 53 per cent this year, has dropped by more than 9 per cent from its record high on October 20.
"Gold is losing some froth while still pricing in concerns over Fed independence and the possibility of stagflation as well as underlying geopolitical risk and international tensions. Some of the froth has been blown off in a much-needed correction," Rhona O'Connell, an analyst at StoneX, said in a note.
Spot silver was down 1.5 per cent at $47.32 per ounce, platinum eased 1.8 per cent to $1,538.05, and palladium fell 3.1 per cent to $1,400.30.
FAQs
Q1. How has silver performed?
A1. Spot silver was down 1.5 per cent at $47.32 per ounce, platinum eased 1.8 per cent to $1,538.05, and palladium fell 3.1 per cent to $1,400.30.
Q2. How does gold perform during low-interest rate?
A2. Non-yielding gold thrives in a low-interest-rate environment and during times of economic uncertainty.
