Gold Prices Experience Significant Weekly Drop Amid U.S. Interest Rate Outlook
Global gold markets experienced a significant sell-off at the close on Friday, November 14, resulting in a price drop of over 3%. This decline was influenced by firm statements from U.S. Federal Reserve officials, which lowered investor expectations for an interest rate cut in December.
By the end of the session, spot gold prices fell by 1.82% to $4,095.16 per ounce, after peaking at $4,211.06 earlier in the day. Despite this daily decline, gold recorded a weekly gain of 3.7%.
Similarly, U.S. gold futures for December delivery decreased by 2.24%, settling at $4,100.40 per ounce.
The recent prolonged U.S. government shutdown, the longest of its kind, concluded on Thursday, creating a data void that leaves the Federal Reserve in a state of uncertainty ahead of its upcoming monetary policy meeting.
Investors had hoped that new economic data would indicate a slowdown, providing the Federal Reserve with "room to cut interest rates in December," a factor that typically enhances gold's appeal as a non-yielding asset.
However, these expectations began to wane as more Federal Reserve policymakers adopted a "cautious stance towards further monetary easing," according to market analysis.
Market expectation tools reflected this change, with the CME Group's FedWatch tool showing that the odds of a 25 basis point rate cut next month fell to 53%, down from 64% earlier in the week.
It is important to note that gold, which does not yield interest, tends to perform well during periods of economic uncertainty and in low interest rate environments, making it sensitive to changes in monetary policy forecasts.
