Gold prices fell on Thursday as the U.S. dollar strengthened as investors weighed a raft of economic data showing slowing inflation, suggesting the Federal Reserve may be cautious about concerns further reductions in interest rates.
Spot gold was down 0.3% at $2,627.60 an ounce, as of 0302 GMT.
U.S. gold futures were down 0.5% at $2,627.00.
The dollar index rose 0.1%, reducing the appeal of gold for holders of other currencies. [USD/]
The market is focused on Fed rate cuts, with the latest personal consumption expenditure (PCE) data suggesting a slowdown in inflation, leading to expectations that Fed policy next year could be less dovish than expected, said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.
Meanwhile, the Fed’s struggle to return inflation to its 2% target, combined with the possibility of higher tariffs under the upcoming Trump administration, could limit the U.S. central bank’s ability to implement rate cuts next year.
According to CME Group’s FedWatch tool, there is currently a 64.7% chance that rates will be cut by a quarter point in December.
Separately, Mexican President Claudia Sheinbaum warned of retaliation if Trump implements 25% tariffs, citing potential U.S. job losses and rising consumer prices.
Gold is considered a safe haven during periods of economic or geopolitical instability, including trade wars.
Trading is expected to be limited, with U.S. markets closed Thursday for the Thanksgiving holiday.
In the short term, particularly over the next few days or two, gold could come under further pressure. However, gold’s long-term uptrend remains intact, Wong added.
SPDR Gold Trust, the largest gold-backed exchange-traded fund, said its holdings fell 0.10% to 878.55 metric tons on Wednesday. [GOL/ETF]
Spot silver fell almost 1% to $29.78 an ounce, platinum fell 0.1% to $928.05 and palladium was flat at $972.75.
