On Friday, October 31, gold prices experienced a slight dip due to the dollar strengthening amidst uncertainty surrounding further Federal Reserve rate cuts. Despite this, bullion was still on track to secure its third consecutive monthly gain. At 0700 GMT, spot gold saw a decrease of 0.3%, settling at $4,011.60 per ounce, with a 4% increase for the month. U.S. gold futures for December delivery, on the other hand, inched up by 0.1% to hit $4,021.20 per ounce.
Chief Market Analyst Tim Waterer from KCM Trade noted that the recent hawkish stance of the Fed Chairman didn't bode well for gold prices. Additionally, the likelihood of a rate cut in December appears to be more uncertain than previously anticipated. This change in sentiment has resulted in a stronger dollar, which complicates the gold market from a yield perspective. The dollar index remained near its highest level in three months against other currencies, driving up the cost of bullion for international holders.
Following a 25 basis points interest rate cut by the Federal Reserve on Wednesday—the second cut this year—market expectations for another cut at the upcoming December policy meeting decreased. Chair Jerome Powell's statements led to traders reducing their bets on a future rate cut, with the market now pricing in a 74.8% probability of a 25-bp cut, down from 91.1% the previous week, as per CME Group's FedWatch tool.
Furthermore, U.S. President Donald Trump revealed on Thursday that an agreement had been reached to reduce tariffs on China in exchange for Beijing taking action against the illicit fentanyl trade, restarting U.S. soybean purchases, and maintaining rare earths exports. In other news, gold was sold at a discount in India for the first time in seven weeks, while lower prices spurred trading activity in other Asian markets.
In terms of other precious metals, spot silver saw a 0.4% increase to $49.1 per ounce, while platinum rose by 0.6% to $1,621.60 and palladium climbed by 1.2% to $1,462.43. The current market dynamics reflect a complex interplay between the dollar's strength, Federal Reserve policies, and international trade negotiations, all of which contribute to the fluctuating prices of precious metals like gold.
