Gold slipped, with traders assessing an increasingly uncertain outlook for the Federal Reserve’s interest-rate cutting path following a week of choppy US economic data.
Bullion fell as much as 0.4% in early trading on Monday, after a gauge of the US dollar climbed. The greenback has gained 1.7% this month as traders pare expectations on the pace of easing by the Fed, with the combination of sticky inflation and weak labor-market figures last week also driving volatility in Treasury markets. Both higher yields and a stronger dollar are typically negative for gold, which is priced in the currency and doesn’t pay interest.
About 40 basis points of easing are priced in for the next two Fed meetings, whereas a full half-point of cuts was seen as near certain prior to the September jobs report. Money managers have decreased their bullish gold bets to an eight-week low, according to the latest Commodity Futures Trading Commission report.
The precious metal remains more than 25% higher this year, with rate-cut optimism fueling recent gains. Strong central bank purchases and heightened geopolitical tensions have also supported gold, though fears that hostilities in the Middle East could morph into a full-blown regional war have yet to be realized — possibly negating some haven demand.
Spot gold edged down 0.3% to $2,649.88 an ounce as of 7:03 a.m. in Singapore. It closed Friday little changed from the start of the week. The Bloomberg Dollar Spot Index was up 0.1%. Silver, platinum and palladium all fell.
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