Gold prices edged lower on Thursday, easing from a near two-week high hit in the previous session, while investors assessed the likelihood of a US interest rate cut in December.
Spot gold was down 0.2 percent at USD4,157.29 per ounce, as of 1601 GMT. US gold futures for December delivery slipped 0.2 percent to USD4,154.30 per ounce. “We still expect the consolidation that started with the October setback to continue as the dust of that setback has not fully settled yet,” said Julius Baer analyst Carsten Menke. Bullion has fallen 5percent since hitting a record high of USD4,381.21 on October 20, but has broadly traded above the key USD4,000 an ounce level.
“The factors we see in favour of the gold market are largely unchanged, including slowing US growth leading to lower interest rates and a weaker US dollar, sustained safe-haven demand and continued strong central bank buying,” Menke added. Conflicting signals from the Federal Reserve on the timing and size of US interest rate cuts have accelerated hedging flows into swaptions and derivatives tied to overnight rates.
Kevin Hassett, who has emerged as a frontrunner to replace Jerome Powell as Fed Chair, has aligned with President Donald Trump in advocating a rate cut.
Comments this week from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller also bolstered expectations of a cut.
Traders are now pricing in an 85percent chance of a rate cut next month compared with just 30percent a week earlier, CME FedWatch showed. Non-yielding gold tends to perform well in a low-interest-rate environment.
US markets are closed on Thursday for the Thanksgiving holiday and will operate on a shortened schedule on Friday. Spot silver fell 0.3percent to USD53.17 per ounce, platinum gained 1percent to USD1,604.72, and palladium rose 0.5 percent to USD1,430.40.
