(RTTNews) – Gold prices fell on Friday as trade tensions between the US and China eased, as well as expectations of another Federal Reserve rate cut dampened demand for the precious metal.
Front month Comex gold for November delivery fell $19.10 (or 0.48%) to $3,982.20 a troy ounce.
Front month Comex silver for November delivery fell 43.40 cents (or 0.90%) to $47.994 a troy ounce.
Despite some gains this week, gold rose to $141.40 (or 3.68%) per troy ounce in October, rising for the third straight month. Silver rose for the sixth consecutive month, rising $1.7410 (or 3.76%) per troy ounce in October.
Despite the unavailability of official data due to the ongoing government shutdown – which would have given a broader picture of the US economic landscape – the US Federal Reserve cut interest rates by a quarter percentage point on October 29, bringing rates to a range of 3.75% to 4.00%.
Following the rate cut announcement, US Federal Reserve Chairman Jerome Powell warned that another rate cut in December was “not a foregone conclusion.” Powell also emphasized that Fed officials have vastly different opinions on how to proceed.
Today, Kansas City Fed President Jeff Schmid and Dallas Fed President Laurie Logan detailed their reasons for opposing a rate cut, emphasizing that inflation shows no signs of abating.
These comments gave some carry-over support to the greenback resulting in the yellow metal becoming more expensive for foreign buyers and losing some ground.
US-China trade tensions eased after the recent meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea, where both leaders agreed to extend the tariff truce. Overall US tariff rates on Chinese imports have now increased to 47% from 57% previously.
Even though investors cautiously view these moves as temporary, they are optimistic about economic growth in the near term. This also reduced demand for the safe-haven metal.
Meanwhile, Trump has called on Republicans to invoke the “nuclear option” to end the shutdown. Note, the “nuclear option” in the US Senate is a parliamentary procedure that would give the Senate powers to amend the rules (controlling the filibuster) by a simple majority vote (51) rather than the two-thirds super-majority (67) normally required.
On the geopolitical front, in the intensifying Russia-Ukraine war, Ukraine’s emergency services said Russia attacked the northeastern Ukrainian city of Sumy overnight, wounding 11 residents.
In the Middle East, despite Trump’s assurances that the Gaza peace plan and ceasefire still hold, recent attacks on Gaza by Israel have raised concerns whether the ceasefire may be more fragile than expected.
CME Group’s FedWatch tool is currently indicating a 63.0% chance of a 25-basis-point interest rate cut at the Federal Reserve’s upcoming December 9-10 meeting.
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