Gold prices edged lower in Asian trading on Monday, extending last week’s decline as investors continued to dial back expectations of an interest rate cut from the Federal Reserve next month.
A firmer U.S. dollar added further pressure on the metal, while growing risk aversion—driven by uncertainty around the timing of future rate reductions and broader economic concerns—did little to support bullion.
Spot gold dipped 0.6% to $4,053.84 per ounce by 00:33 ET (05:33 GMT), while December gold futures retreated 0.9% to $4,055.91/oz.
Traders unwind December rate-cut bets
Gold’s latest pullback has been driven primarily by traders reducing expectations that the Fed will cut rates in December.
According to CME FedWatch, markets were pricing in a 39.8% chance of a 25 bps cut at the December 10–11 meeting—down sharply from 61.9% just a week earlier.
The probability of rates staying unchanged rose to 60.2%, up from 38.1%.
Uncertainty around the U.S. economic outlook has intensified, particularly after the country exited its longest government shutdown on record. The shutdown is expected to delay or distort several key October indicators, notably inflation and employment, leaving the Fed with limited visibility heading into its final meeting of the year.
Signs of stubborn inflation have also reinforced expectations that policymakers will keep borrowing costs higher for longer. Meanwhile, Chair Jerome Powell has remained largely non-committal on the prospect of a December cut.
Higher-for-longer rates tend to weigh on non-yielding assets like gold and other precious metals.
Among the broader complex, spot platinum inched up 0.1% to $1,548.0/oz but remained deep in the red after Friday’s selloff, while spot silver was flat at $50.5795/oz, following a sharp retreat from near-record highs last week.
Dollar steadies ahead of Fed minutes and key U.S. data
The dollar firmed slightly on Monday after last week’s losses, with the dollar index adding 0.1%.
Markets now turn their attention to a heavy slate of U.S. data, including November PMI readings and September nonfarm payrolls, due Thursday.
The minutes from the Fed’s October meeting—set for release Wednesday—are expected to provide more clarity on policymakers’ thinking as the December decision approaches.
Inflation and labor-market data remain the Fed’s two most influential inputs for policy direction.
However, U.S. officials have warned that both October releases may never be published due to the shutdown’s disruption.
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