Gold Prices Dip Below $4,100 amid Federal Reserve Uncertainty
NEW YORK – The price of an ounce of gold fell below the $4,100 level this week, succumbing to a wave of selling pressure triggered by shifting expectations surrounding Federal Reserve monetary policy and lingering economic data gaps. The decline follows a 2% decrease on Thursday,building on a prior 3% drop earlier in the same session,as investors reacted to hawkish signals from Fed members and uncertainty stemming from the recent U.S. government shutdown.
The recent volatility in gold prices underscores the metal’s sensitivity to interest rate forecasts and broader market sentiment. While traditionally considered a safe haven asset during times of economic or geopolitical stress, gold has been unable to fully withstand the impact of a strengthening dollar and diminished expectations for near-term rate cuts. This downturn affects investors holding gold as a hedge against inflation or economic instability, as well as the broader commodities market.
The longest U.S. government shutdown in history, which concluded on Thursday, created a meaningful backlog of economic data, leaving the Federal Reserve and market analysts in a position of uncertainty ahead of their December policy meeting. this lack of data is expected to prompt the central bank to maintain its current monetary policy stance,avoiding any adjustments given the incomplete economic picture.
Market forecasts currently indicate a 46% probability that the Federal Reserve will lower interest rates by 25 basis points at its December meeting-a decrease from previous expectations of 50%. Lower U.S. interest rates typically benefit gold, as they reduce the possibility cost of holding the non-yielding asset compared to interest-bearing investments like U.S. Treasury bonds.
