Bullion steadied following two days of losses that were spurred by fading optimism the US Federal Reserve will cut interest rates next month.
The gold price was trading slightly below $4,100 an ounce on Monday, having lost more than 2% in the previous session. It edged up 0.1% to $4,088.16/ounce as of 9:04 am in Singapore. The Bloomberg Dollar Spot Index was also up 0.1%. Silver and palladium gained, while platinum was flat.
Expectations for another rate cut were scaled back last week as Fed officials showed little conviction for reducing borrowing costs. Lower interest rates typically make non-yielding bullion more appealing to investors.
Traders and policymakers are awaiting a backlog of data held up by the longest US government shutdown in history. A six-week absence of reliable statistics on the labour market and inflation in the world’s largest economy has made some officials increasingly reluctant to commit to another rate cut next month.
Traders are now split on the likelihood of a rate cut in December, after all but pricing in a quarter-point reduction less than a month ago.
“The shutdown is over, but the data fog it created is still clouding markets—the next few weeks will deliver numbers we barely have a handle on,” said Hebe Chen, a strategist at Vantage Markets in Melbourne.
Gold is still up about 55% this year and remains on target for its best annual performance since 1979. A scorching rally to a record high above $4,380 last month has been underpinned by elevated central-bank purchases, while investors have also piled into precious metals as a hedge against growing fiscal unease in some of the world’s biggest economies.
“Despite a minor pullback, gold’s medium-to-long-term trend remains intact, supported by softening dollar expectations and investors favoring safety as both the near- and long-term outlooks stay blurred,” Chen said.