Gold slips as Fed rate caution boosts dollar, set for 3rd monthly rise

Gold prices fell on Friday, as the dollar firmed on uncertainty over further Federal Reserve rate cuts, although bullion was still on track for its third straight monthly gain.

Spot gold was down 0.5% at $4,004 per ounce, as of 0240 GMT. Bullion has gained 3.9% so far this month.

U.S. gold futures for December delivery were steady at $4,016.70 per ounce.

“The Fed Chairman did have his hawkish cap on this week which didn’t do gold any favours,” said KCM Trade Chief Market Analyst Tim Waterer.

“The prospect of a rate cut in December now looks like it could be much more of a toss-up than was previously thought, which has boosted the dollar while making things a bit more complicated for gold from a yield perspective.”

The dollar index held near its highest level in three months against its rivals, making bullion more expensive for other currency holders.

On Wednesday, the U.S. central bank cut interest rates by a quarter of a percentage point for the second time this year, taking the benchmark overnight rate to a target range of 3.75%–4.00%.

However, traders scaled back bets that the Fed will cut rates again at its next policy meeting in December after remarks from Fed Chair Jerome Powell.

Markets are now pricing in a 74.8% probability of a 25-basis-point cut from the Fed in December compared with a 91.1% chance a week ago, according to the CME Group’s FedWatch tool.

U.S. President Donald Trump said on Thursday 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 U.S. soybean purchases and keeping rare earths exports flowing.

SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.42% to 1,040.35 tons on Thursday from 1,036.05 tons on Wednesday.

Elsewhere, spot silver was steady at $48.94 per ounce, platinum rose 0.2% to $1,614.53 and palladium climbed 1.7% to $1,469.63.