Gold prices edged down in Asian trading on Thursday, weighed by persistent U.S. inflation and robust economic data that raised doubts about the extent of the Federal Reserve’s potential interest rate cuts.
The yellow metal had already seen some declines earlier in the week, following reports of an Israel-Hezbollah ceasefire that reduced demand for safe-haven assets.
However, gold’s losses remained limited as the dollar continued to pull back from recent highs, with traders still holding onto expectations of a possible interest rate cut in December.
Spot gold slipped 0.2% to $2,630.52 per ounce, while February gold futures dropped 0.4% to $2,653.91 as of 23:00 ET (04:00 GMT).
Strong PCE and GDP data cast doubt on rate cut prospects.
The PCE price index, the Federal Reserve’s preferred measure of inflation, rose as anticipated in October, further exceeding the central bank’s 2% annual target. This was accompanied by data showing steady third-quarter GDP growth and slightly better-than-expected weekly jobless claims.
While these figures did not significantly alter expectations for a December rate cut, they contributed to growing uncertainty among traders about the trajectory of interest rates in 2025.
Adding to the uncertainty is the prospect of a Donald Trump presidency, as his anticipated expansionary policies and trade tariffs are expected to drive inflation higher.
This dynamic is likely to constrain the Fed’s easing cycle. UBS analysts recently noted that the central bank may slow its rate cuts to a quarterly pace in 2025 and predicted a higher terminal rate.
