Gold steadies on stronger dollar as investors trim rate-cut bets

Gold held steady on Monday, kept in check by a stronger dollar as investors dialed back bets for further Federal Reserve rate cuts following Chair Jerome Powell’s hawkish remarks last week, while easing U.S.-China trade tensions also crimped demand for bullion.

Spot gold lost 0.1% to $3,997.94 per ounce, as of 0250 GMT. U.S. gold futures for December delivery rose 0.3% to $4,008.60 per ounce.

Gold prices have retreated about 10% from a record high of $4,381.21 hit on Oct 20, as the dollar climbs to a near three-month high. 

“There’s a lack of upside momentum (in gold) due to some technical factors and the dollar remains pretty resilient so that has a negative impact on gold,” OANDA senior market analyst Kelvin Wong said.

The Fed cut interest rates by 25-bps on October 29 for the second time this year. Traders now see a 71% chance that the Fed will cut rates again in December, down from over 90% before Powell’s remarks, as per CME’s FedWatch Tool.

Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainties.

Investors have their eyes on other news, including ADP employment data and ISM PMIs this week, for economic indicators that could alter the Fed’s hawkish stance.

“Safe-haven play has been reduced at this point in time, over the de-escalation of U.S.-China trade tensions,” Wong added.

“It could be also a rotation towards a much more risk on play, in the equities.” 

U.S. President Donald Trump said last week, he had agreed with Chinese President Xi Jinping to trim tariffs on China in exchange for concessions by Beijing on illicit fentanyl trade, U.S. soybean purchases and rare earths exports.

Elsewhere, spot silver rose 0.3% to $48.77 per ounce, platinum climbed 1% to $1,583.28 and palladium gained 0.4% to $1,439.21.