Gold extends falls on firm US dollar, easing Fed rate-cut bets

[BENGALURU] Gold fell for a fourth straight session on Tuesday (Nov 18), weighed down by a firm US dollar and diminished prospects of a US interest rate cut next month.

Spot gold was down 0.1 per cent at US$4,038.43 per ounce, as at 9.04 am. US gold futures for December delivery fell 0.9 per cent to US$4,037.50 per ounce.

The US dollar held steady against its rivals after a sharp rise in the previous session. A stronger US dollar makes gold more expensive for other currency holders.

Last week, lawmakers reached an agreement to end what had become the longest-ever US government shutdown, during which an absence of official economic data helped dampen expectations for another rate cut from the Federal Reserve in December.

Traders are currently pricing in a 43 per cent probability of a quarter-point Fed rate cut next month, down from 50 per cent in last week.

Fed vice-chair Philip Jefferson said on Monday that the US central bank needed to “proceed slowly” with further rate cuts, denting expectations for a decrease next month.

Non-yielding gold tends to do well in a low-interest-rate environment and during times of economic uncertainties.

Focus this week will be on US data releases, including the September nonfarm payrolls report on Thursday, for clues on the health of the world’s largest economy.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said that its holdings fell 0.25 per cent to 1,041.43 tonnes on Monday from 1,044.00 tonnes on Friday.

Central banks likely bought large amounts of gold in November in a multi-year trend to diversify reserves to hedge geopolitical and financial risks, Goldman Sachs said on Monday.

Elsewhere, spot silver eased 0.3 per cent to US$50.05 per ounce, platinum was steady at US$1,534.70, and palladium fell 0.6 per cent to US$1,385.23. REUTERS