Gold prices declined in Asian trading on Tuesday, extending their recent slide as fading expectations for a Federal Reserve rate cut in December strengthened the U.S. dollar and added pressure on non-yielding assets.
Investor caution ahead of the long-delayed September nonfarm payrolls report—scheduled for release this week—also supported the dollar and weighed on precious metals.
Spot gold fell 0.7% to $4,019.19 an ounce, while December gold futures dropped 1.4% to $4,018.89 an ounce by 00:38 ET (05:38 GMT).
Gold Weakens as December Rate Cut Bets Fade
Gold’s decline has been driven mainly by markets dialing back expectations of a December Fed rate cut. The delay in key economic data releases, caused by the recent U.S. government shutdown, has left policymakers with limited visibility ahead of the December 10-11 meeting.
The upcoming September payrolls report, due Thursday, is expected to be the most current labor-market reading available to the Fed before the meeting. According to the CME FedWatch tool, markets now see a 42.4% chance of a 25-basis-point cut and a 57.6% chance of rates staying unchanged.
Higher U.S. rates reduce the appeal of gold and other non-yielding assets, as Treasuries tend to offer more stable returns in elevated-rate environments. Recent comments from Fed officials have also delivered mixed signals, adding uncertainty to the outlook.
Stronger Dollar Adds Pressure on Metals
A firmer dollar, supported by expectations that U.S. rates will remain elevated for longer, added additional downward pressure on metals and other dollar-priced commodities.
Spot platinum dropped 0.7% to $1,526.77 an ounce, while spot silver fell 0.7% to $49.8585 an ounce. Industrial metals also weakened, with London Metal Exchange copper futures slipping 0.8% to $10,695.90 per ton, reversing part of last week’s strong gains.
The dollar’s strength was further boosted by rising concerns over fiscal strains in developed economies, especially Japan. A sharp increase in long-term Japanese government bond yields weighed on the yen and pushed more investors into the dollar.
