The Federal Reserve’s recent decision to cut interest rates by 25 basis points, setting the target at 4.50%-4.75%, has further affected gold’s status as a safe haven. Fed Chairman Jerome Powell’s comments also suggested more rate cuts may be in store to counter economic pressures, boost the dollar and impact gold demand.
According to CME Group’s FedWatch Tool, traders estimate a 75% probability of another rate cut in December, which could impact Treasury yields and potentially draw money away from non-yielding assets like gold.
Investor sentiment is changing amid economic data
Risky sentiment in broader markets, fueled by optimism about Federal Reserve support and possible fiscal measures in China, contributed to gold’s pullback.
Traders are looking to upcoming US data, including the Michigan Consumer Sentiment Index and the Inflation Expectations report, as indicators of near-term market direction.
These data points could influence the strength of the dollar, and in turn, the appeal of gold.
China’s economic strength and trade tensions
Globally, China’s trade surplus increased significantly to $95.27 billion in October, with exports growing 12.7% year-on-year while imports fell 2.3%.