Gold Prices Continue to Fall as Fed Hawkishness
Gold prices held below $2,620 an ounce, paring gains from earlier in the session to trade with limited movement in the past week as investors continued to monitor signs of Fed hawkishness. Strong labor market data per payrolls and evidence of stubborn inflation prompted FOMC members to project fewer Fed rate cuts in 2025, increasing the odds of holding onto non-yielding assets and forcing bullion prices to suffer a slight loss in Q4. However, gold prices are set to rise 27% by year-end.
The Fed has cut rates by 100bps since the start of the tapering cycle, including a 50bps cut in September following a sudden spike in unemployment. Gold prices have also been supported by rising demand for safe-haven assets throughout the year amid wars in Ukraine, Gaza, Lebanon, and missile attacks from Iran. Lastly, gold has been boosted by massive buying by central banks, led by the PBoC's efforts to stockpile reserves, which lifted prices to a record high of $2,790 in September.
Source: Trading Economics
