Gold prices remained firmly above $2,650 for the second consecutive session on Wednesday, as traders adjusted expectations for a significant interest rate cut by the Federal Reserve (Fed) in the upcoming November meeting. While prices hovered around $2,660—up 0.14%—they faced pressure from rising U.S. Treasury yields, which increased by 4.5 basis points to 3.775%.
Market sentiment soured during the U.S. trading session, contributing to a pullback from gold’s record high of $2,670. Meanwhile, the U.S. Dollar Index (DXY), which measures the dollar against six major currencies, rebounded from a 14-month low, rising 0.54% to 100.88.
Recent U.S. economic data revealed a slowdown in manufacturing activity while the services sector showed resilience. However, a decline in Consumer Confidence, as reported by the Conference Board, indicated potential weaknesses in the labor market.
Last week, the Fed implemented a 50 basis point reduction in borrowing costs, lowering the range to 4.75%-5.00%. Traders are increasingly confident about further cuts, with the CME FedWatch Tool indicating a 60% probability for a 50 basis point cut and a 40% chance for a 25 basis point cut.
In 2024, gold prices have surged by 29%, driven by strong physical demand and easing monetary policies from major central banks. Ongoing geopolitical tensions may keep traders eyeing the $2,700 mark.
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