Gold futures experienced significant turbulence on Monday, continuing to recover from a sharp price drop the previous week. Following a decline of $91 last Monday, the precious metal has been trading within a narrow range, reflecting ongoing market instability.
The U.S. dollar demonstrated notable strength during the session, rising by 0.54% to an index value of 106.444. This gain is largely attributed to growing speculation that the Federal Reserve may opt to maintain its current interest rate policy at the next central bank meeting. Investors remain cautious, closely monitoring potential changes in monetary policy as economic data continues to unfold.
As of the latest trading, gold is priced at $2,661.90 per troy ounce. The metal has shown significant volatility, having reached an all-time high above $2,800 before experiencing a dramatic pullback. Gold fell by $255, or 9.03%, bottoming out at $2,568.10, but has since rallied, recovering $174 from its lowest point. Saxo Bank analysts have highlighted the range-bound nature of the market, with investors eagerly awaiting fresh U.S. economic data and further clarity on potential interest rate cuts.
Recent economic data, including the U.S. October personal consumption expenditures (PCE) index, which rose to a 2.3% annualized rate, has added complexity to the Federal Reserve’s decision-making process. This development is likely to influence discussions on future monetary policy.
Market sentiment, as indicated by the CME FedWatch Tool, suggests growing anticipation of a 25-basis-point rate cut at the Federal Reserve’s next meeting, with a 74.5% probability. This marks a notable increase from the 52.3% probability observed a week ago, though it is still a decrease from the 83% likelihood one month prior. In parallel, the probability of the Fed keeping rates unchanged has also adjusted.
Treasury yields have reacted to these shifting expectations. The two-year note yield rose to 4.202%, up 4.3 basis points, while the 10-year note yield increased by 1.8 points to 4.193%. These movements reflect the uncertainty surrounding the economic outlook and potential policy changes.
As investors brace for a new U.S. President and the Federal Reserve’s final meeting of the year, economic indicators and monetary policy decisions remain at the forefront of market attention. The gold market, with its pronounced volatility, continues to serve as a key barometer of global economic sentiment, offering valuable insights into broader financial trends.
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