Gold Prices Experience Significant Weekly Drop Amid Diminished Rate Cut Expectations in the U.S.
On Friday, November 14, global gold markets encountered a notable sell-off, leading to a price drop exceeding 3%. This decline was driven by stern remarks from U.S. Federal Reserve officials, which dampened investor expectations regarding a potential interest rate cut in December.
By the end of the trading session, the spot gold price fell by 1.82% to $4,095.16 per ounce, after reaching a peak of $4,211.06 earlier in the day. Despite this daily decline, the precious metal recorded a weekly gain of 3.7%.
Similarly, December U.S. gold futures dropped by 2.24%, closing at $4,100.40 per ounce.
The recent U.S. government shutdown, the longest of its kind, concluded on Thursday, creating a significant gap in economic data. This situation has placed the Federal Reserve in a state of uncertainty ahead of its scheduled monetary policy meeting next month.
Investors had anticipated that new economic data would indicate a slowdown, potentially providing the Fed with "room for a rate cut in December," a factor that typically enhances gold's appeal as a non-yielding asset.
However, these expectations began to fade as more Federal Reserve officials adopted a cautious stance regarding further monetary easing, according to market analysis.
Market expectation tools reflected this shift, with the CME Group's FedWatch tool indicating that the likelihood of a 25-basis-point rate cut next month has decreased to 53%, down from 64% earlier in the week.
It is important to note that non-yielding gold tends to perform well during periods of economic uncertainty and in low-interest-rate environments, making it sensitive to changes in monetary policy expectations.
