Gold prices fell on Thursday as investors took profits after hitting a near two-week high in the previous session. The decline came as investors reassessed the likelihood of a US interest rate cut in December amid mixed signals from the Federal Reserve.
Brian Lan, general manager at GoldSilver Central, noted that traders are seeking to take profits after Wednesday's rise, stressing that the Fed is not providing a clear vision of its next steps, which is pushing gold into a state of consolidation and waiting.
The ambiguity in the Federal Reserve's position
Conflicting signals about the timing and size of the interest rate cut have led to increased hedging flows into swaps and interest rate-linked derivatives, as investors seek to protect their positions amid heightened uncertainty in monetary policy.
Several Federal Reserve officials, including New York Fed President John Williams and member Christopher Waller, have expressed that an interest rate cut in December may be appropriate due to the weak labor market, which is putting pressure on Treasury bond yields.
Benchmark 10-year US Treasury yields held near their lowest levels in a month during the previous session.
Divergent positions of decision-makers
Despite this, the positions of some Federal Reserve branch heads were contrary, as they called for caution and not to move to reduce interest rates until clearer data emerges regarding inflation approaching the 2 percent target.
Meanwhile, Kevin Hassett, who has become a leading candidate to succeed Jerome Powell as head of the Federal Reserve, has emerged to assert that interest rates should be lower, a position consistent with the vision of US President Donald Trump.
US interest rate futures indicate that markets are pricing in an 85 percent probability of an interest rate cut in December.
Gold, which does not generate income, typically benefits from a low-interest-rate environment.
Data released on Wednesday showed a decline in weekly unemployment benefit claims, despite the continued weakness of the labor market in providing enough jobs for job seekers.
Other data also showed a decline in US consumer confidence during November, amid growing concerns about labor market conditions and the financial situation of families.
Gold at settlement yesterday
Gold prices rose at the close of trading on Wednesday, with the precious metal recording gains for the fourth consecutive session, supported by expectations of a Federal Reserve interest rate cut in December.
Gold futures for December delivery rose 0.60%, or $25.20, to $4,165.20 an ounce, closing at their highest level since November 13.
Gold now
Spot gold fell 0.5 percent to $4,145.08 an ounce.
U.S. gold futures for December delivery also fell 0.6 percent to $4,140.80 an ounce.
Other minerals
In other metals markets, spot silver fell 0.9 percent to $52.89 an ounce, while platinum rose 1.4 percent to $1,611.04 and palladium fell 0.9 percent to $1,409.87 an ounce.
