Gold prices stabilized under pressure from the rise in the dollar, at a time when investors are evaluating economic data indicating that the Federal Reserve (the US central bank) may take a more cautious approach regarding interest cuts.
Spot gold prices rose 0.12% to $2,639.12 per ounce, at the time of writing this report, and US gold futures fell 0.09% to $2,637.30.
Kelvin Wong, chief market analyst for the Asia-Pacific region at OANDA, said that the market is focusing on the US interest rate cuts in light of the latest data for core personal consumption expenditures indicating a slowdown in inflation, which reinforces expectations that the US Federal Reserve’s policies next year will be less accommodative than It was previously expected.
At the same time, the Federal Reserve’s difficulty in bringing inflation back to its 2% target, coupled with the possibility of higher tariffs under the administration of US President-elect Donald Trump, may limit the ability to cut rates next year.
According to CME’s FedWatch tool, markets currently expect a quarter-point rate cut of 68.2% in December.
Gold is considered a safe investment during periods of economic or geopolitical instability, including trade wars.
Trading is expected to be modest due to the US markets being closed on Thursday for the Thanksgiving holiday.
Wong added that in the near term, especially over the next few days or two weeks, gold may be under more pressure, however, expectations remain that gold’s trend will be upward in the long term.
As for other precious metals:
- Silver fell 0.55% to $29.93 per ounce.
- Platinum rose 0.33% to $934.26.
- Palladium rose 0.25% to $979.68.
The dollar is rising
The dollar rose today, supported by a surprise cut in interest rates in South Korea, while the yen witnessed its strongest weekly performance in 3 months with increasing bets on raising interest rates in Japan next month.
- The yen fell slightly during the Asian trading session, but it recorded a level of 151.83 per dollar and rose 2.4% this week to recover from the losses it incurred since the US elections, and the markets expect 55% that the Bank of Japan will raise interest rates in December.
- The South Korean won also fell slightly, after traders reported that the authorities stabilized the currency exchange rate after the central bank cut interest rates at its meeting for the second time in a row, an outcome expected by only 4 of 38 economists in a Reuters poll.
- The euro fell to the level of $1.054 from $1.0553, which is its highest level in 4 months achieved yesterday, Wednesday, after statements tending to tighten monetary policy from a member of the Board of Directors of the European Central Bank.
Broad trading was weak due to the Thanksgiving holiday in the United States, but despite the calm in major markets, emerging markets witnessed some movements.
- The Mexican peso rose nearly 1% after Donald Trump said on the Truth Social platform that Mexican President Claudia Sheinbaum “agreed to stop immigration through Mexico,” an issue that Trump linked to his pledge to impose tariffs.
- The dollar index rose 0.23% to 106.33.
- The British pound rose to $1.26.
In terms of cryptocurrencies:
- Bitcoin rose 2.09% in 24 hours to $95,432.
- Ethereum increased 6.19% to $3,627.
Oil is falling
Oil prices fell slightly in Asian trading today after a sudden jump in gasoline stocks in the United States before the “Thanksgiving” holiday, which raised concerns about demand in the world’s largest fuel consumer.
Brent crude futures fell 25 cents, or 0.29%, to $72.58 per barrel, and US West Texas Intermediate crude futures fell 24 cents to $68.48 per barrel.
Trading is expected to be modest due to the holiday in the United States.
The US Energy Information Administration said yesterday, Wednesday, that gasoline stocks in the country rose by 3.3 million barrels in the week ending November 22, contrary to expectations of a slight decline in fuel stocks before the holiday season.
Analysts had expected US gasoline inventories to decline by 46,000 barrels last week, according to a Reuters poll conducted before the Energy Information Administration report was issued.
The slowdown in fuel demand growth in the two largest consumers, the United States and China, has severely affected oil prices this year, but supply cuts from the OPEC Plus group, which includes the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, limited losses.
Two sources from the group told Reuters last Tuesday that member states are considering an additional postponement of a planned increase in oil production that is supposed to begin in January. The group is scheduled to hold a meeting last Sunday to decide on production policy for the first months of 2025.
The group, which pumps about half of the world’s oil, had previously announced that it would gradually reduce oil production cuts through small increases over several months in 2024 and 2025.
