FX.co ★ Gold Turns Negative

Gold has declined, dipping below $3,950 per ounce, following remarks from Fed Chair Powell, who emphasized that a rate cut in December is not guaranteed. This has dampened market expectations for another 25 basis point adjustment and sent the 10-year Treasury yields climbing above 4%, consequently increasing the financing costs associated with holding non-yield-bearing gold. This caution somewhat dampens the impact of the Federal Reserve's recent 25 basis point reduction to a target range of 3.75–4.00%, as well as its decision to halt the balance sheet runoff in December. Both actions typically lower real short-term interest rates and add liquidity, which generally benefits precious metals. Additionally, consistent buying by central banks and increased ETF accumulation have tightened the availability of metal in both exchange and official channels, establishing a strong support for prices. Progress in developing a US-China trade framework has reduced some demand for gold as a safe haven but hasn't eliminated the underlying factors, such as ongoing macroeconomic uncertainty and concerns about currency devaluation, that continue to drive interest in gold.