Gold Falls Below $4000 Amid Dollar Rise and Anticipation of U.S. Data

In trading on Tuesday, November 4th, gold prices fell below the $4000 per ounce mark, affected by the rise of the U.S. dollar to its highest level in three months, as investors awaited U.S. economic data that could shape the Federal Reserve's monetary policy. The spot gold price dropped by 0.8% to $3968.09, while December futures fell by 0.9% to $3979.20, at a time when the dollar index is rising, increasing the cost of gold for holders of other currencies.

This rise in the value of the dollar was driven by a decrease in expectations for a new rate cut, due to divisions within the Federal Reserve, prompting investors to reduce their bets on a potential cut in December.

In this context, David Meger, Director of Metals Trading at High Ridge Futures, stated: "With the dollar reaching new high levels, we see that it affects the gold market... Part of this recent strength of the dollar and its weight in the gold market comes from the decreased likelihood of a rate cut in December." Tim Waterer, Senior Market Analyst at KCM Trade, confirmed to Reuters that "the strength of the dollar represents a thorn in gold's side, as traders reassess the likelihood of a rate cut before the end of the year."

The Federal Reserve had cut interest rates last week for the second time this year, but its chairman Jerome Powell emphasized that an additional cut in 2025 "is not a foregone conclusion." According to the CME Group's FedWatch tool, markets currently expect a 65% chance of a new rate cut in December, compared to over 90% before Powell's statements.

Despite the recent decline, gold is still up about 53% since the beginning of the year, but it has lost more than 8% of its value compared to its historical peak recorded on October 20. Investors are awaiting this week's employment report from ADP for new indicators regarding monetary policy trends, with Waterer stating: "If the employment data disappoints expectations, it could give gold a chance to rebound again."

In related news, U.S. President Donald Trump announced last week his approval of a reduction in tariffs imposed on China in exchange for concessions from Beijing, a move that could impact global markets.

Other precious metals also recorded price declines, with silver falling in spot transactions by 1.3% to $47.47 per ounce, platinum dropping by 1.2% to $1547.09, while palladium fell by 3.5% to $1394.75.