Gold plunges below $4,100 as hawkish Fed rhetoric trims December rate cut bets
Gold (XAU/USD) tumbled nearly 2% on Friday, yet it has recovered after reaching a daily low of $4,032 on growing speculation that the Federal Reserve might pause its easing cycle as most officials struck a hawkish message.
Bullion prices fell during the day sharply, but at the time of writing XAU/USD trades beneath $4,100, down 1.72%.
XAU/USD slides nearly 2% as policymakers push back on easing expectations and traders reassess odds of a December cut
Money markets trimmed their bets for the December meeting from 72% a week ago to about a 50% chance, with most officials worried about inflation despite acknowledging the labor market softness.
The Kansas City Fed's Jeffrey Schmid said, “inflation is too hot” and added that policy is where it should be. In the last meeting he was one of the two dissenters with Fed Governor Miran eyeing 50 bps of cuts, while Schmid opted to hold rates unchanged.
Even though the largest government shutdown should get economic data flowing, the Bureau of Labor Statistics (BLS) has not released a statement of tentative dates of data releases. In its website it read that they “will announce revised news release dates on this page as they become available.”
Traders remain hopeful that fresh data would indicate that further easing is needed due to the deterioration of the US economy.
As of writing, US Treasury yields are edging up, while Greenback trims some of its Thursday’s losses that pushed the US Dollar Index (DXY) far from 100.00, reaching a weekly low of 98.99.
Source: FXstreet
