Gold set for biggest weekly decline in three years
Gold is facing its biggest weekly loss in more than three years, down more than 4%, as reduced expectations for aggressive interest rate cuts by the Federal Reserve have strengthened the US dollar. A stronger dollar, which posted its biggest weekly gain in more than a month, has made gold less attractive to holders of other currencies. Moreover, rising US Treasury yields put further pressure on non-yielding gold, with the 10-year yield rising to 4.451% from 4.31% a week ago.
Economic data added to gold’s challenges. In October, U.S. retail sales rose 0.4%, beating the forecast of 0.3%. Upward revisions to sales in September further strengthened the picture of economic resilience. Core inflation rates remained above the Fed’s 2% target, with an annual core CPI of 3.3%.
Federal Reserve Chairman Jerome Powell indicated there is no urgency to cut rates, citing robust economic conditions. Following these comments, market expectations for a rate cut in December fell to 59%, down from 83% earlier this week. Higher interest rates reduce the appeal of gold, a non-yielding asset, increasing selling pressure.
Market forecast
The outlook for gold remains bearish in the near term as fundamental pressures from a stronger dollar, rising yields and reduced expectations of rate cuts weigh on prices. However, traders will keep an eye on the Fed’s upcoming official comments and any geopolitical developments for new guiding signals. A decisive break below $2,538.50 could lead to extended losses, while continued buying around current levels could trigger a technical recovery towards $2,651.98.