Gold prices edged lower on Friday as a stronger U.S. dollar weighed on investor sentiment, with markets reassessing expectations for further interest rate cuts by the Federal Reserve. Despite the dip, bullion remains on track for its third consecutive monthly gain, buoyed by ongoing demand for safe-haven assets.
Spot gold slipped 0.4% to $4,005.54 per ounce as of 0459 GMT, while U.S. gold futures for December delivery held steady at $4,018.10 per ounce. So far this month, gold has gained about 3.9%, supported by easing inflation concerns and continued geopolitical uncertainty.
“The Fed Chairman did have his hawkish cap on this week, which didn’t do gold any favours,” said Tim Waterer, Chief Market Analyst at KCM Trade. “The prospect of a rate cut in December now looks like much more of a toss-up than was previously thought, which has boosted the dollar while making things a bit more complicated for gold from a yield perspective.”
The dollar index hovered near its highest level in three months, making gold more expensive for holders of other currencies. A firmer dollar typically pressures gold, which is priced in U.S. currency and does not yield interest.
Earlier this week, the Federal Reserve cut its benchmark interest rate by a quarter of a percentage point for the second time this year, bringing it to a range of 3.75%–4.00%. However, comments from Fed Chair Jerome Powell dampened expectations of another cut in December.
According to the CME Group’s FedWatch tool, traders now see a 74.8% probability of a 25-basis-point rate cut in December, down from 91.1% just a week earlier. The shift reflects growing uncertainty over how aggressively the central bank will move to support the economy amid mixed inflation and employment data.
Adding to the global market dynamics, U.S. President Donald Trump announced on Thursday that he had reached an understanding with Chinese President Xi Jinping to scale back tariffs on Chinese goods. In return, Beijing pledged to curb the illicit fentanyl trade, resume U.S. soybean purchases, and maintain rare earth exports — developments that could ease trade tensions between the world’s two largest economies.
In Asia, physical gold markets saw mixed trends. Indian dealers sold bullion at a discount for the first time in seven weeks as prices retreated, while demand picked up in other regional hubs following recent declines.
Among other precious metals, spot silver held steady at $48.89 per ounce, platinum was unchanged at $1,610.75, and palladium rose 1.5% to $1,466.42.
