Gold Rebounds After Deep Weekly Loss With Rate Outlook in Flux
Gold advanced after suffering its worst weekly drop since 2021, as the US dollar given and traders weighed the outlook for Federal Reserve rate cuts given Donald Trump’s return to the White House next year.
Bullion rose as much as 0.7% to trade above $2,581 an ounce, following a loss of more than 4% last week. While Trump’s win has clouded the outlook for reductions next year given the potential for his policies to be inflationary, about 46% traders expect there will probably be a rate cut next month before his inauguration. Lower borrowing costs benefit gold, as it doesn’t pay interest.
Some Fed policymakers have signaled their openness to more easing. On Friday, the Fed Bank of Chicago’s Austan Goolsbee said as long as inflation continued down toward the central bank’s 2% goal, interest rates would be “a lot” lower over the next 12 to 18 months. Fed Bank of Boston President Susan Collins said a December reduction remained on the table.
Gold has shed about 8% from a record high last month, with losses accelerating after Trump’s victory, which spurred a surge in the dollar to a two-year high. Against that backdrop, hedge funds’ bullish wagers on gold fell to the lowest in more than three months, Commodity Futures Trading Commission data show.
Spot gold — which remains 25% higher year-to-date — was up 0.7% to $2,581.25 an ounce at 9:11 a.m. in Singapore. The Bloomberg Dollar Spot Index eased for a second day, dipping 0.2%. Silver, platinum and palladium all advanced.
Source: Bloomberg
