Gold Prices See Significant Weekly Decline Amid Reduced Rate Cut Expectations
Gold markets around the world experienced a sharp decline at the close on Friday, November 14, with prices dropping more than 3% following hawkish remarks from U.S. Federal Reserve officials. These statements diminished expectations for a potential rate cut in December.
By the end of the trading session, spot gold prices fell by 1.82%, settling at $4,095.16 per ounce, after reaching a high of $4,211.06 earlier in the day. Despite this daily decline, gold still recorded a weekly increase of 3.7%.
In the U.S., gold futures for December delivery decreased by 2.24%, closing at $4,100.40 per ounce.
The recent U.S. government shutdown, which was the longest in history, concluded on Thursday, leaving a significant gap in economic data. This uncertainty poses challenges for the Fed as it prepares for its upcoming monetary policy meeting.
Investors had anticipated that new economic data would indicate a slowdown, potentially giving the Fed the latitude to lower interest rates in December, which typically enhances gold's attractiveness as a non-yielding asset.
However, these hopes began to fade as more Federal Reserve policymakers adopted a cautious approach towards further monetary easing, according to market analysts.
Market tools such as the CME Group's FedWatch tool reflected this shift, showing a decrease in expectations for a 25 basis point rate cut next month, dropping from 64% to 53% earlier in the week.
Gold, which does not yield interest, often performs well during times of economic uncertainty and in low interest rate environments, making it sensitive to changes in monetary policy expectations.
