The price of gold witnessed a slight decline on Thursday morning, falling from its highest level in more than three weeks, coinciding with the rise in the dollar index. This decline comes as investors anticipate the resumption of the release of US economic data, which will be decisive in directing the course of the Federal Reserve’s decision on interest rates.
Spot gold prices fell by 0.1 percent to reach $4,194.63 per ounce by 02:03 GMT, after hitting its highest level since October 21 on Wednesday. US gold futures for December delivery also fell by 0.3 percent to $4,199.30 per ounce.
This decline is partly due to the dollar index consolidating its gains against other currencies, making the yellow metal priced in dollars less attractive to holders of other currencies.
Investors are currently concerned with the issue of resuming government work in the United States, after the House of Representatives took a procedural step towards ending the longest government shutdown in the country’s history, which began on October 1.
This closure has halted the release of vital economic data, including jobs and inflation reports. Economists stressed the need for the US Department of Labor’s statistical agency to give priority to producing employment and inflation reports for November, to ensure that Federal Reserve officials have up-to-date information before their meeting on monetary policy in December.
Last month, the US central bank cut interest rates by 25 basis points, but Chairman Jerome Powell has signaled caution about making another cut this year, partly due to a lack of data.
However, a Reuters poll of economists indicated that 80 percent expect the US central bank to cut the key interest rate again by 25 basis points next month, to support the weakening labor market.
Gold, a non-yielding asset, tends to perform well in low interest rate environments and during periods of economic uncertainty. Gold prices have risen 60 percent since the beginning of the year, reaching a historic high of $4,381.21 on October 20, supported by geopolitical and trade tensions and hopes for a Federal Reserve rate cut.
In a related context, the SPDI Gold Trust Fund, the largest stock-traded fund backed by gold in the world, announced that its holdings rose by 0.03 percent on Wednesday to reach 1,046.64 metric tons, compared to 1,046.36 metric tons on Tuesday.
As for other precious metals, spot silver settled at $53.37 per ounce, platinum rose by 0.1 percent to $1,616.24, while palladium fell by 0.6 percent to $1,465.21.
