Gold Wobbles, Markets Grow More Confused
Gold fluctuated as traders weighed the growing prospect of a US interest rate cut against the likelihood of a peace deal in Ukraine.
Bullion traded around $4,135 an ounce, after ending the previous session little changed. Delayed economic data reinforced bets that the Federal Reserve will cut interest rates at its upcoming meeting. A modest rise in September retail sales suggested that several months of strong spending had lost momentum, while consumer confidence suffered its sharpest decline this month since April.
Strengthening the outlook for a lower interest rate environment, the front-runner to be the next Fed chairman – White House National Economic Council Director Kevin Hassett – is seen as someone who shares President Donald Trump's support for lower borrowing costs, Bloomberg reported. Gold typically benefits when interest rates are low, as it doesn't pay interest, and swaps traders now see a more than 80% chance of a quarter-point rate cut in December.
The Fed's next decision has become "a major Pandora's box of risks this year, and possibly into 2026," said Hebe Chen, an analyst at Vantage Markets in Melbourne. "Without a strong economic glue holding expectations together, any optimism remains fragile—and recent fluctuations in equities and crypto show how quickly sentiment can shift," he said.
Gold bullion's gains were somewhat muted after ABC News reported that Ukrainian officials had agreed to a plan to end the war with Russia. An end to the protracted war would dampen demand for safe-haven assets. Read More: Trump Says He Will Meet Putin and Zelenskiy When Deal Is in 'Final Stages'
Gold has consolidated above the $4,000 an ounce threshold after retreating from last month's peak above $4,380 an ounce. The precious metal—still on track for its best annual performance since 1979—has gained more than 55% this year, driven by central bank buying and strong inflows from private investors behind the so-called debasement trade.
Gold rose 0.1% to $4,135.73 an ounce as of 8:52 a.m. Singapore time. The Bloomberg Dollar Spot Index was flat after ending the previous session down 0.3%. Silver fell 0.2%. Platinum and palladium also fell.(asd)
Source: Bloomberg.com
