Gold rally eases as dollar edges higher, investors cash out

Gold prices slipped on Wednesday, pulled down by a rebound in the dollar and profit-booking after bullion rose to a near three-week high in the previous session on expectations of interest rate cuts by the Federal Reserve next month.

Spot gold was down 0.5% at $4,107.41 per ounce, as of 0421 GMT, after hitting its highest since October 23 on Tuesday.

US gold futures for December delivery edged 0.1% lower to $4,113.80 per ounce.

“The dip in dollar has suited gold and silver, which have both been posting gains this week,” KCM Trade Chief Market Analyst Tim Waterer said.

“It appears that ‘normal service has resumed’ for gold, with the precious metal trading back above $4,100 while eyeing off targets further north should U.S. macro data continue to be supportive for additional monetary policy easing.”

The dollar index, meanwhile, edged 0.1% higher against its rivals and was set to a snap a five session losing streak, making gold less attractive for other currency holders.

The U.S. Senate passed a deal on Monday to restore federal funding after a record-long shutdown that has disrupted food benefits for millions, left hundreds of thousands of federal workers unpaid, snarled air traffic, and delayed the release of government economic data.

Traders are pricing in a roughly 68% probability that the U.S. central bank will cut rates by 25 basis points next month, up from 64% in the previous session, according to CME Group’s FedWatch tool.

Non-yielding gold tends to do well in a low-interest-rate environment and during economic uncertainties.

Fed Governor Stephen Miran said on Monday a 50-bps rate cut would be appropriate for December, noting that inflation is falling while the unemployment rate is drifting higher.

SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.41% to 1,046.36 metric tons on Tuesday from 1,042.06 tons on Monday.

Elsewhere, spot silver fell 0.4% to $51.05 per ounce, platinum slipped 0.4% to $1,578.95 and palladium dropped nearly 1% to $1,431.47.