Gold price dips as US Fed interest rate cut expectations fall
Gold (GC=F)
Gold prices reversed a two-day rise as investors dampened expectations that the US Federal Reserve will cut interest rates next month.
Bullion was trading around $4,062 per ounce at press time, down 0.5% on Thursday after rising nearly 1% in the previous two sessions.
This comes after minutes emerged from the October Fed meeting, in which officials said it would likely be appropriate to keep interest rates steady for the rest of 2025. Swap contracts linked to the Fed policy rate currently indicate a 36% chance of a cut. Before Wednesday, the probability was about 50%.
Gold (GC=F) has rallied strongly this year, gaining more than 50% and regaining some of its gains after reaching a record in October. The upward momentum has been supported by the Fed’s two previous rate cuts, as well as increased central bank purchases and inflows into bullion-backed exchange-traded funds (ETFs).
The total value of global gold (GC=F) reserves currently stands at around €4.22 trillion, up 44.66% since December 2024, when gold was trading at €2,508.39 per ounce.
On the other hand, silver (SI=F) fell to $51 per ounce, while platinum (PL=F) and palladium (PA=F) remained flat.
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Oil (BZ=F, CL=F)
Oil prices rose 0.7 percent on Tuesday as investors assessed the impact of U.S. sanctions on Russia’s Rosneft and Lukoil that will take effect Friday. This also comes as the European Union (EU) is exploring further measures to pressure Moscow.
Brent (BZ=F) traded just above $63 a barrel after falling more than 2% on Wednesday, the biggest drop in a week, and West Texas Intermediate (CL=F) approached $60.
This comes as suitors are lining up to buy parts of Lukoil’s international business following the fines. Exxon Mobil Corp (XOM) officials met with Iraqi oil minister Hayyan Abdul Ghani on Wednesday to discuss the Russian company’s stake in the West Qurna 2 field, which accounts for 10% of Iraqi production.
Meanwhile, the EU is exploring further restrictions on entities that permit Russia’s oil-carrying shadow tanker fleet, in a bid to cripple Moscow’s ability to finance its war against Ukraine. The US penalties on Rosneft and Lukoil are also part of a new initiative to end the conflict.
Oil (BZ=F, CL=F) is still running at an annual loss against expectations of a surplus as OPEC, its allies and other producers increase production; however, recent geopolitical tensions have added some risk premium to prices
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pounds (GBPUSD=X)
Sterling gained 0.1% against the US dollar as traders prepared for Britain’s biggest bond sale since the Covid-19 outbreak.
