Gold prices dipped on Thursday as the US dollar gained strength, prompting investors to reassess economic data that reflects slower progress in curbing inflation.
Spot gold fell 0.3% to $2,627.60 per ounce, while US gold futures dropped 0.5% to $2,627.00. The dollar index edged up by 0.1%, making gold more expensive for investors holding other currencies and reducing its appeal.
Investor attention remains fixed on the Federal Reserve’s next moves. Recent Core Personal Consumption Expenditures (PCE) data indicates a deceleration in inflation, suggesting the Fed may adopt a less aggressive approach to interest rate cuts in 2025, according to Kelvin Wong, senior market analyst at OANDA. The Fed’s challenge to achieve its 2% inflation target, coupled with potential tariff threats under the incoming Trump administration, may limit its ability to reduce rates further.
The CME Group’s FedWatch tool currently places a 64.7% probability of a 0.25% rate cut in December. However, geopolitical risks are also in focus. Mexican President Claudia Sheinbaum has warned of economic retaliation if former President Donald Trump imposes a proposed 25% tariff, cautioning that such a move could lead to job losses in the US and higher prices for consumers.
Gold continues to be viewed as a safe-haven asset during times of economic and geopolitical uncertainty, including potential trade wars.
Trading volume is expected to remain light due to the US Thanksgiving holiday, which could lead to further short-term pressure on gold prices over the next few days to two weeks. However, the long-term outlook for gold remains positive, Wong added.
In other precious metals, spot silver declined by 1% to $29.78 per ounce, platinum edged down 0.1% to $928.05, while palladium remained steady at $972.75. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.10% decrease in its holdings, now standing at 878.55 metric tonnes as of Wednesday.
