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Gold holds under US$4,000 on dollar resilience, Fed rate-cut outlook

Gold holds under US$4,000 on dollar resilience, Fed rate-cut outlook

By Swedan Margen

Fashion

Bullion hit a record high of US$4,381.21 on Oct 20, but have fallen close to 10% since

Gold traded below the US$4,000 per ounce mark again on Tuesday (Nov 4) as the US dollar remained resilient at over three-month highs, while reduced chances of another US interest rate cut in December and easing US-China trade tensions blunted bullion’s demand.

Spot gold slipped 0.4 per cent to US$3,983.87 per ounce, as at 8.47 am.

US gold futures for December delivery lost 0.5 per cent to US$3,994.10 per ounce.

The US dollar rose to a three-month high against the euro, extending its gains from last week on doubts about the outlook for another US Federal Reserve rate cut this year.

The Fed last week cut interest rates for the second time this year, but chair Jerome Powell said another cut this year was “not a foregone conclusion”.

Market participants now see a 65 per cent chance that the Fed will cut rates again in December, down from over 90 per cent before Powell’s remarks, as per CME’s FedWatch Tool.

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Fed officials on Monday continued pressing competing views on the economy, a debate set to intensify ahead of the Fed’s December policy meeting and in the absence of key data, including from the Bureau of Labor Statistics, due to the federal government shutdown.

Investors now eagerly await the release of ADP US employment data due on Wednesday and ISM PMIs this week.

Non-yielding gold tends to do well in a low-interest-rate environment and during times of heightened economic uncertainty.

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Until the new rules took effect on Saturday, most Chinese gold retailers had been able to fully deduct value-added tax (VAT) on their inputs when selling to consumers.

Bullion hit a record high of US$4,381.21 on Oct 20, but have fallen close to 10 per cent since.

US President Donald Trump said on Thursday that he had agreed with Chinese President Xi Jinping to trim tariffs on China in exchange for Beijing cracking down on the illicit fentanyl trade, resuming US soybean purchases and keeping rare earths exports flowing.

Meanwhile, China ended a long-standing tax exemption policy for some gold retailers on Saturday, potentially setting back a gold buying spree in the world’s biggest consumer market.

Elsewhere, spot silver shed 0.3 per cent at US$47.95 per ounce, platinum gained 0.1 per cent at US$1,566.60 and palladium lost 0.8 per cent to US$1,433.50. REUTERS

Originally published by businesstimes.com.sg. Syndicated material does not necessarily reflect the views of Grazia British.

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