Global gold prices experienced a significant downturn during the weekend session, with spot gold falling by 90 USD to 4,080 USD on 14/11. At one point, prices neared 4,030 USD, primarily driven by growing uncertainty surrounding a potential interest rate cut by the US Federal Reserve in december.
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Gold prices plummeted during the trading session on 14/11. Photo: Kitco
The market's decline followed remarks from several Federal Reserve officials, indicating that the prospect of an interest rate reduction in december is increasingly slim. David Meger, director of precious metals trading at High Ridge Futures, noted, "Gold and silver prices are falling due to the decreasing probability of a Fed rate cut in december".
The recent, longest-ever US government shutdown, which concluded on 13/11, created a data vacuum. This left the Federal Reserve and investors with insufficient information ahead of next month's policy meeting. Investors are currently hoping that new economic data will signal a slowdown, providing the Fed with room to cut rates and thereby increase gold's appeal.
However, this hope is fading as Fed officials maintain a cautious stance on further easing. Jeffrey Schmid, president of the Kansas City Fed, recently stated that "continued interest rate cuts cannot resolve labor market fractures, which are more likely caused by structural changes in technology and immigration policy".
The CME FedWatch Tool now indicates that the market projects a nearly 46% chance of a rate cut at next month's meeting, a decrease from 50% earlier in the week.
Fawad Razaqzada, a market analyst at FOREX.com, explained that "when investors receive margin calls, they typically seek to close all positions. This is partly why gold is also falling, despite existing risk-off sentiment".
Beyond gold, other precious metals also saw losses during the weekend. Silver dropped 2,8% to 50,8 USD per ounce, platinum fell 2,1% to 1,547 USD, and palladium lost nearly 2,8%, closing at 1,387 USD.
Despite these weekend declines, precious metals recorded overall gains for the week, with gold's price increasing by 2,3%.
Ha Thu (according to Reuters, Kitco)
