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

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

Spot gold was down 0.8% at $3,970.39 per ounce, as of 0625 GMT. U.S. gold futures for December delivery slid nearly 1% to $3,979.30 per ounce.

The dollar steadied, hovering near a three-month high as a divided U.S. Federal Reserve spurred traders to rein in interest rate cut wagers.

“The stronger dollar is acting as a thorn in the side of gold, with traders recalculating the likelihood of another rate cut arriving by year-end,” said KCM Trade Chief Market Analyst Tim Waterer.

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

Market participants now see a 65% chance of another rate cut in December, down from over 90% prior to Powell’s remarks, as per CME’s FedWatch Tool.

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

Non-yielding gold thrives in a low-interest-rate environment and during times of economic uncertainty.

Investors now eagerly await the release of ADP U.S. employment data, due on Wednesday and ISM PMIs this week for cues on rate cuts.

“If we see another bleak looking ADP print, that may give gold a foothold to start tracking higher again,” Waterer added.

Bullion, which has gained 53% so far this year, has fallen more than 8% from its record high reached on October 20.

U.S. President Donald Trump said last week that he agreed to trim tariffs on China in exchange for concessions by Beijing.

Elsewhere, spot silver fell 1.3% to $47.47 per ounce, platinum eased 1.1% to $1,548.15 and palladium fell 2.8% to $1,404.68.