Quick overview

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The bullion metal dropped below $4,000 per ounce once more as the dollar held steady at more than three-month highs, and the likelihood of another U.S. December interest rate reduction and easing U.S.-China trade tensions reduced demand for bullion. Due to concerns about  another rate cut by the US Federal Reserve this year, the dollar extended its gains from last week and reached a three-month high against the euro

 

Chair Jerome Powell stated that another rate cut this year was “not a foregone conclusion” despite the Fed cutting interest rates for the second time this year last week. On Thursday, President Donald Trump announced that he and Chinese President Xi Jinping had reached an agreement to reduce tariffs on China in return for Beijing’s crackdown on the illegal fentanyl trade, resuming the buying of U.S. soybeans, and maintaining the flow of rare earth exports.

China also terminated a long-standing tax exemption policy for certain gold retailers, which could potentially halt a gold-buying binge.

Gold prices remained stable globally as investors hunkered down for the U.S. economic data. This week’s private payroll data is needed to determine the likelihood of another U.S. interest rate cut this year, according to Reuters.

“Gold is in the process of carving out a trading range, maybe in the high 3000s to the mid-4000s. This is a sort of anticipated consolidation following such a significant move,” according to Edward Meir, a Marex analyst.

The metal, after reaching a record high on October 20, has gained 53 percent this year.

Gold’s pause still doesn’t seem to be a breakdown. Ole Hansen, head of commodity strategy at Saxo Bank, stated in a note that while seasonal softness, short-term Chinese policy noise, and a stronger dollar explain the short-term retreat, none alter the longer-term narrative.