Gold prices retreated in Asian trading on Tuesday, adding to recent weakness as traders grew increasingly doubtful that the Federal Reserve will move ahead with a December rate cut. The shift in expectations strengthened the U.S. dollar, reducing appetite for non-yielding assets such as gold.
Uncertainty ahead of this week’s long-delayed September nonfarm payrolls report further bolstered the dollar, putting additional pressure on precious metals.
Spot gold dipped 0.7% to $4,019.19 an ounce, while December gold futures fell 1.4% to $4,018.89 per ounce as of 00:38 ET (05:38 GMT).
Gold Extends Slide as Markets Scale Back December Cut Forecasts
The latest selloff was driven largely by investors rapidly unwinding bets on a rate cut at the Fed’s December 10–11 meeting.
With key U.S. economic data delayed by the extended government shutdown, markets worry the Fed may be forced to act with limited visibility into the health of the economy.
Thursday’s September nonfarm payrolls reading is expected to be the last major official datapoint on the labor market before the meeting.
According to CME FedWatch, markets now assign a 42.4% probability to a 25-basis-point cut, while the odds of a pause have climbed to 57.6%.
The prospect of interest rates staying higher for longer continues to undermine the appeal of gold, as elevated Treasury yields offer more attractive, stable returns.
Recent comments from Fed officials have been mixed, adding to the policy uncertainty.
Stronger Dollar Weighs on Precious and Industrial Metals
A strengthening U.S. dollar, which has staged a solid rebound over the past few sessions, added further downward pressure to metals priced in the greenback.
Spot platinum slipped 0.7% to $1,526.77 per ounce, and spot silver declined by the same margin to $49.8585 per ounce.
Among base metals, benchmark copper futures on the London Metal Exchange dropped 0.8% to $10,695.90 a ton, reversing some of last week’s strong gains.
The dollar’s advance was fueled by expectations that U.S. interest rates will remain elevated.
Growing concerns about fiscal strains in major developed economies—particularly Japan—also supported the greenback. A sharp rise in long-dated Japanese government bond yields weighed heavily on the yen and pushed more capital toward the dollar.