Gold price heading for slight weekly loss as interest rate cut chances fade

SadaNews - The gold price is heading toward a slight weekly decline, after the latest US jobs report showed mixed signals that were not sufficient to push the Federal Reserve toward a rate cut.

The price of the precious metal dropped to about $4,037 an ounce on Friday, down approximately 0.5% for the week. This latest labor market report will be reviewed by the Fed before its meeting on December 9 and 10, revealing job growth that exceeded expectations in September, but conversely showing an increase in the unemployment rate.

Analysts at "TD Securities," including Oscar Munoz, wrote in a note: "The jobs report provided something for everyone, allowing both the hawks and those favoring expansionary policy to return to their corners."

The minutes from the October Open Market Committee meeting, published on Wednesday, showed that many policymakers at the Fed prefer to keep interest rates unchanged. Futures contracts now indicate only a 40% chance of a rate cut next month, after expectations two weeks ago favored a cut of a quarter percentage point.

Gold typically faces pressure in a high-interest-rate environment, which explains the recent decline after reaching a record peak in October. However, the metal is still up about 55% since the beginning of the year, on track for its best annual performance since 1979. This increase has been supported by strong inflows into exchange-traded funds and heavy purchases by central banks.

However, the recent rush into gold is considered exaggerated, driven by what is known as "the trade of abandoning sovereign currencies and bonds," amid rising financial fears among G7 countries.

Carsten Menke, head of Next Generation Research at "Julius Baer," stated: "The recent abandonment trade is based more on hopes than on realism," adding that this phenomenon remains a long-term driver for gold, but some price corrections were warranted at this time.

At 9:31 AM Singapore time, gold fell by 0.3% to $4,037.44 an ounce. The Bloomberg Dollar Strength Index remained stable, while silver retreated, and palladium and platinum edged slightly higher.