Gold prices remained stable on Tuesday as the U.S. dollar hovered near two-month highs, creating a complex landscape for investors caught between profit-taking and potential interest rate cuts by the Federal Reserve.
At 0955 GMT, spot gold saw a slight increase of 0.1%, reaching $2,654.58 per ounce, while U.S. gold futures rose by 0.2% to $2,671.80. Despite these modest gains, analysts warn that gold faces significant challenges in the current market environment.
Independent analyst Ross Norman noted, “With the U.S. dollar near two-month highs and rising Treasury yields, alongside the temptation for profit-taking after gold’s nearly 30% gain this year, gold is experiencing some fierce headwinds.”
Last month, gold prices reached a record high of $2,685.42 but have since retreated as the dollar’s strength makes bullion more expensive for holders of other currencies.
Despite current pressures, Norman remains optimistic about gold’s future, stating, “Further rate cuts will likely support gold prices, and we may see a fresh all-time high before the year ends.” According to the CME FedWatch tool, traders currently anticipate an 87% chance of a 25-basis-point cut in November, which typically benefits non-yielding assets like gold.
However, caution is advised. Fed Governor Christopher Waller has called for “more caution” regarding future rate cuts, while Minneapolis Fed President Neel Kashkari suggests that further reductions are likely as the Fed approaches its 2% inflation target.
Market participants are also closely monitoring upcoming U.S. economic data, including retail sales, industrial production figures, and weekly jobless claims.
In related markets, spot silver steadied at $31.15 per ounce. Meanwhile, platinum prices fell by 1.1% to $981.56 and palladium decreased by 1.2% to $1,017.98. UBS analysts commented on platinum supply issues: “Scrap supply has disappointed in recent years; however, we anticipate a recovery next year while still expecting the platinum market to be under-supplied in 2025.”
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