Gold (XAUUSD) prices have erased all of their gains and are now down by over 1% on Thursday as the odds of a December rate cut continue to fall following comments from Fed officials.
Meet Your ETF AI Analyst
- Discover how TipRanks' ETF AI Analyst can help you make smarter investment decisions
- Explore ETFs TipRanks' users love and see what insights the ETF AI Analyst reveals about the ones you follow.
Gold typically benefits from lower rates because the precious metal doesn’t pay out interest. That makes gold more attractive when compared to interest-bearing assets, like Treasury bonds, because the opportunity cost of holding it declines.
Fed Officials Uncertain about December Rate Cut
Several Fed officials, including St. Louis Fed President Alberto Musalem and Minneapolis Fed President Neel Kashkari, have pointed to sticky inflation as a reason to proceed cautiously with future rate cuts. At the same time, rate cuts could benefit the labor market, which has already shown signs of weakening, creating a challenging situation for the central bank.
Uncertainty from the officials has led to the odds of the Fed cutting by 25 bps at the December Federal Open Market Committee (FOMC) meeting falling to 47.6%, down from 62.9% yesterday and 69.6% a week ago, according to CME’s FedWatch tool.
Stay ahead of macro events with our up-to-the-minute Economic Calendar — filter by impact, country, and more.