Rate Cut Speculation Heats Up, Here's What Happened to Gold!
Gold prices moved steadily in Tuesday morning trading at around US$4,135 per troy ounce, after surging nearly 2% the previous day. Monday's sharp rise was fueled by market confidence that the Fed will cut interest rates next month.
Positive sentiment stemmed from comments by Fed Governor Christopher Waller, who publicly supported a December rate cut due to the weakening US labor market. Gold tends to benefit when interest rates fall because it offers no yield.
The six-week US government shutdown, the longest in history, delayed the release of important economic data. As a result, market participants are relying heavily on comments from Fed officials for clues about the next interest rate move. New York Fed President John Williams also said a "near-term" rate cut is still possible, and swap traders now estimate an almost 80% chance of a quarter-point cut at the final meeting of the year.
The market believes the rapid reaction to every comment from a central bank official demonstrates how sensitive sentiment has become to Fed talk lately. This week, the focus is on delayed data such as retail sales and the September producer price index (PPI) released Tuesday, as well as jobless claims due a day later. Additional comments from Fed officials are expected to be the last before the communications blackout begins on November 29th.
Despite consolidating after a correction from a record above US$4,380 per ounce last month, gold is still up nearly 60% year-to-date and could potentially post its best annual performance since 1979. In the last session, gold was flat at around US$4,135, while the Bloomberg Dollar Index was also virtually unchanged. In contrast, silver fell (asd)
Source: Newsmaker.id
