Gold slump holds as Fed Chair douses hopes for December rate cut

Bond yields and the dollar climbed following his remarks, weighing on gold as it does not pay interest and is priced in the greenback.

Gold edged higher after four days of losses, with traders scaling back bets on more Federal Reserve easing after Chair Jerome Powell downplayed the likelihood of a December interest-rate cut.

Bullion traded near $3,950 an ounce on Thursday, after falling 0.6% in the previous session. Powell advised against trying to predict whether another rate cut would happen in 2025 after policymakers had earlier delivered a widely expected quarter-point reduction on Wednesday. Bond yields and the dollar climbed following his remarks, weighing on gold as it does not pay interest and is priced in the greenback.

The precious metal has retreated sharply in recent days following a scorching rally that drove prices to a record above $4,380 an ounce last week. Technical indicators had shown the ascent was overheated, while growing signs of progress in US-China trade relations have eroded bullion’s haven appeal.

Presidents Donald Trump and Xi Jinping are set to finalize a détente when they meet Thursday in South Korea, putting the world’s biggest trade fight on hold — at least for now. Initial signals indicate the leaders are readying a pact that could roll back some tariffs, fees and export restrictions either threatened or enforced in recent months.

Still, even after its recent pullback, gold has gained about 50% this year, supported by central-bank buying and interest in the so-called debasement trade, in which investors avoid sovereign debt and currencies to protect themselves from runaway budget deficits.

“The market has experienced a natural correction, but we continue to view this bull market as incomparable with prior bull markets in terms of the breadth and depth of potential monetary demand,” Sebastian Mullins, head of multi-asset and fixed income at Schroders, said in a note.

The surge had drawn institutional and retail buyers to gold-backed exchange-traded funds, although outflows this week have removed some of this support. Total gold ETF holdings fell for a fifth consecutive day on Tuesday — the longest streak of declines since May, according to data compiled by Bloomberg.

Spot gold rose 0.5% to $3,950.42 an ounce at 7:27 a.m. in Singapore. The Bloomberg Dollar Spot Index dipped .1%, after climbing 0.3% in the previous session. Silver rose for a third day, while platinum and palladium also advanced.

Market watchers seeking clues on the scale of investor and central bank appetite for bullion will be anticipating the release later on Thursday of the World Gold Council’s quarterly demand report.