Gold Little Changed as Traders Eye Outlook for Fed Rates

One kilogram gold bars. Photographer: Brendon Thorne/Bloomberg

(Bloomberg) -- Gold steadied as traders weighed comments from Federal Reserve officials as well as data showing a dramatic weakening in the US jobs market, raising the prospect of lower interest rates.

Bullion was little changed just below $4,000 an ounce, paring gains made earlier in the session. Markets were buffeted early Thursday by a report that showed US companies had announced the most job cuts for any October in more than two decades, according to data from outplacement firm Challenger, Gray & Christmas Inc. The dollar weakened.

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Weaker jobs numbers bolster the case for the Fed to cut borrowing costs, which would be a boon for non-interest bearing gold. However, Chicago Fed President Austan Goolsbee said on Thursday a lack of official inflation data during the government shutdown makes him more uneasy about continuing interest-rate cuts.

Data provided by private firms like Challenger have become increasingly important for markets as the longest government shutdown in US history delays key official data, making conditions across the world’s largest economy harder to assess.

Gold is on track for its best yearly performance since 1979, hitting successive record before pulling back last month. Rate cuts in the US have helped support prices, which have also been boosted by inflows into bullion-backed exchange-traded funds and elevated central bank purchases.

Economists at Macquarie Group see prices falling over the coming year, after a 50% year-to-date rally. “With global growth beginning to rebound, central bank easing cycles near an end, real interest rates still relatively high and tensions between the US and China easing (at least for now), we suspect the near-term peak is in,” strategists including chief economist Ric Deverell wrote in a note Thursday.

Macquarie said the decline would likely be slower than seen after previous peaks, with prices remaining well above the end-2023 level of about $2,000 an ounce throughout the presidency of Donald Trump. “If geopolitical tensions re-escalate or concerns about the size of the US government return, gold may rally further,” the economists wrote.

Gold slid  to $ an ounce as of 5:18 p.m. in London. The Bloomberg Dollar Spot Index edged  down. Silver steadied, while platinum and palladium fell.

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The Fed’s rate-setting Federal Open Market Committee is due to convene next month for its final scheduled meeting of 2025.

--With assistance from Yihui Xie.

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