Gold hovers around two-month low after Fed comments

by Sybilla Gross

Gold traded near a two-month low, as traders wind back expectations for a Federal Reserve interest-rate cut next month after comments from Jerome Powell underscored resilience in the US economy.

Bullion has fallen six days in a row and is set for a weekly loss of more than 4%, the most since June 2021. Traders pared back expectations for lower rates in December and policy-sensitive US bond yields jumped after Powell said that the central bank will be in no rush to cut given the “remarkably good” performance of the economy. Lower borrowing costs and declining yields tend to benefit gold, as it doesn’t pay interest.

The precious metal has dropped about 8% from a record high on Oct. 31, with losses accelerating after Donald Trump’s election victory last week. A gauge of the dollar has risen to a two-year high on expectations that a Trump presidency will lift economic growth and corporate profits. A stronger greenback makes commodities priced in the currency more expensive for most buyers.

Still, gold is up more than 20% this year, with gains supported by the Fed’s easing cycle, central bank purchases and heightened geopolitical and economic risks that have driven haven demand.

Spot gold fell 0.1% to $2,563.19 an ounce as of 2:54 p.m. in Singapore. The Bloomberg Dollar Spot Index was down 0.2% after hitting the highest level since 2022 on Thursday. Silver and platinum fell while palladium gained.