Gold Prices Dip Below $4,100 amid Federal Reserve Uncertainty
NEW YORK – Theโ price of an ounce of gold fellโ below the $4,100 levelโ thisโ week, succumbing to a wave โขof selling pressure triggered by โขshifting expectations surrounding Federal โReserve monetary policy and lingering economic data gaps. The decline follows a 2% โคdecrease on Thursday,building on a prior 3% dropโฃ earlierโค in the same session,as investors reacted to hawkish โsignals from Fed members โขandโ uncertainty stemming from the โขrecent U.S. government shutdown.
The recent โขvolatilityโค in gold prices underscores the metal’s sensitivityโ toโข interest rate forecasts and broader market sentiment. While traditionally considered โขa safe haven asset during timesโข of economic or geopolitical โฃstress, gold has โฃbeen unable toโฃ fully โwithstand the impact of a strengthening dollarโ and diminished โคexpectations for near-termโ rate โคcuts. This downturn โคaffects investors holding gold โas a hedge against inflation or economic instability, as well as the broader โcommodities market.
The longest U.S. governmentโฃ shutdown in history, which concluded on Thursday, created a meaningful backlog of economic data, leaving โฃthe Federal โReserve โคand market analysts in a positionโฃ of uncertainty ahead of their December policy meeting. โขthis lack of data is โคexpected to prompt the central bank to maintain its current monetary policy stance,avoiding any adjustments โฃgiven the incomplete economic โpicture.
Market forecasts currently indicate a 46% probability that the โFederal Reserve will lower interest rates by 25 basis points at its Decemberโฃ meeting-a decrease from previous โฃexpectationsโ of 50%. โLower U.S.โ interest โrates typically benefit โgold, โขas โคthey reduce the possibility cost of holding the non-yielding asset compared to interest-bearing investments like U.S. Treasury โbonds.
