Gold prices pulled back slightly to around $3,970 per ounce after Federal Reserve Chair Jerome Powell indicated that a rate cut in December is not a certainty. This announcement reduced market expectations for a further 25 basis points reduction and contributed to a rise in the 10-year Treasury yields above 4%. This cautious sentiment partially negated the recent 25 basis points cut by the Fed, adjusting the target range to 3.75% to 4.00%, alongside their decision to halt balance sheet reduction in December—actions typically supportive of precious metals by decreasing real short rates and infusing liquidity.
Continuing purchases by central banks and increased accumulation by exchange-traded funds (ETFs) have led to a constriction in the availability of gold within exchange and official markets, bolstering price stability. Although progress in establishing a US-China trade framework has slightly diminished safe-haven demand, it hasn't counteracted the fundamental drivers for gold, such as enduring macroeconomic uncertainties and fears of currency depreciation.
