Gold slips after Fed officials shy away from a December rate cut
Gold prices fell on Tuesday after three Federal Reserve policymakers signalled they are not ready to back another interest-rate cut in December. Their cautious stance reflected a balancing act between rising inflation risks and signs of a softer labour market.
Why the comments hit gold
Gold is especially sensitive to expectations about interest rates. When investors think rates will stay higher for longer, the opportunity cost of holding non-yielding assets like gold rises. The Fed officials’ reluctance to endorse a December cut pushed those expectations out, strengthening the dollar and denting demand for precious metals.
Competing risks on the Fed’s mind
- Inflation concerns: If inflation shows renewed strength, the Fed may delay cuts to prevent prices from accelerating.
- Softer labour market: Weak jobs data could argue for easier policy to support growth and employment.
Fed policymakers are weighing both risks, which creates uncertainty for markets. That uncertainty tends to reduce momentum in gold, even though gold is traditionally seen as a hedge against inflation.
What investors should watch next
- Upcoming inflation reports and jobs data — these will shape expectations for any future rate moves.
- Fed minutes and speeches — clues about the balance of risks and the likely policy path.
- Dollar and bond yields — moves in these markets often influence gold’s short-term direction.
In short, gold’s recent drop reflects a reassessment of the timing and likelihood of Fed rate cuts. Until the Fed gives clearer guidance or economic data decisively shifts, gold prices may remain sensitive to every policy hint and economic surprise.