Gold Remains Quiet, Markets Uneasy, What Is the Fed Waiting For?
Gold prices stabilized at the start of the week after two days of declines due to diminishing expectations of a Fed rate cut next month. Gold traded just below $4,100/oz, after plunging more than 2% in the previous session. Market participants believe expectations of a rate cut are fading as Fed officials show little confidence in lowering borrowing costs.
The situation is further complicated by the market's continued uncertainty over US economic data. The six-week government shutdown delayed the release of employment and inflation data, making Fed officials reluctant to make major decisions without a clear economic picture. As a result, the chances of a December rate cut are now divided, even though a month ago the market was almost certain of a 25 bps cut.
Analysts refer to this situation as "data fog," a cloud of data that is making the market move cautiously. Traders are awaiting the release of key data in the coming weeks, which will determine the direction of the next monetary policy and provide clarity on inflation momentum and labor market conditions.
Despite facing short-term pressure, gold's medium- to long-term trend remains strong. Gold prices are still up about 55% so far this year, heading for their best annual performance since 1979. Last month's major rally, which reached $4,380, was driven by central bank buying and increased investor interest in hedge assets amid global fiscal uncertainty.
Early in the Asian session, gold edged up 0.1% to $4,088/oz, while the dollar index also strengthened 0.1%. Other precious metals also moved positively, with silver and palladium rising, while platinum remained flat. (asd)
Source: Bloomberg.com
