Gold prices fell on Friday, giving back earlier gains as expectations for a Federal Reserve rate cut in December continued to fade. Lower chances of a near-term rate cut reduced demand for gold, which does not offer interest income.
At 07:45 ET (12:45 GMT), spot gold was down 1.4% at $4,112.01 per ounce. Gold futures for December delivery dropped 1.9% to $4,114.36 per ounce.
Gold Hit by Easing Fed Rate Cut Expectations
Traders have reduced their expectations for a December rate cut after several Fed officials delivered hawkish comments. This shift has pressured gold prices. Minneapolis Fed President Neel Kashkari told Bloomberg he opposed a rate cut last month and remains uncertain about supporting one in December.
St. Louis Fed President Alberto Musalem and Cleveland Fed President Beth Hammack also warned that monetary policy could become too loose with inflation still elevated.
A long government shutdown has delayed key economic reports, leaving the Federal Reserve with limited data as it approaches the December meeting. ANZ analysts noted that it could take weeks for government agencies to resume releasing overdue economic indicators, keeping Fed officials cautious.
Market pricing now reflects roughly a 50% chance of a 25-basis-point cut in December, down from nearly 68% last week, according to CME FedWatch.
Gold Still Set for a Weekly Gain
Despite Friday’s decline, gold remained on track for its first weekly gain in four weeks. The metal recovered the $4,000 per ounce level earlier in the week and was trading about 3% higher on the week. Safe-haven demand has risen due to increasing concerns about the U.S. economic outlook.
The 43-day government shutdown ended this week, and official economic data is expected to resume soon. However, markets are worried the upcoming figures may reveal deeper weaknesses in the economy, partly due to the shutdown’s impact.
Uncertainty also surrounds the legality of the Trump administration’s tariff policies. The Supreme Court is reviewing several challenges to the measures. President Donald Trump said that if the tariffs are ruled illegal, the government could face more than $2 trillion in repayments and related costs. He warned that such an outcome would pose a major national security risk.
Other precious metals also fell on Friday but remained higher for the week. Spot platinum dropped 3.9% to $1,550.85 per ounce, while spot silver fell 3.2% to $51.445 per ounce. Silver has been the standout performer, gaining 7% this week and nearing the record highs reached in October.
