Gold Prices Drop as Dollar Hits Three-Month High

NEW YORK, NY — Gold prices fell by more than 1% on Tuesday, November 4, amid a strong U.S. dollar that reached three-month highs. Traders are closely watching economic data for clues regarding the direction of Federal Reserve monetary policy.

As of 2:15 p.m. EST (1915 GMT), spot gold declined by 1.5% to $3,940.75 per ounce. U.S. gold futures for December delivery also eased, settling at $3,960.50, down 1.3%. The rising dollar index has made gold more expensive for holders of other currencies.

David Meger, the director of metals trading at High Ridge Futures, commented, “With the dollar making new highs, we’re seeing that having a weight on the gold market… some of this recent strength in dollar and the weight in the gold market comes from the less likelihood of a potential (Fed) rate cut in December.”

Although the Federal Reserve maintained interest rates last week, Chair Jerome Powell suggested that a reduction in borrowing costs might be the last of the year. Currently, traders see a 71% chance of a rate cut during the Fed’s meeting on December 9-10, compared to more than 90% a week earlier, according to CME Group’s FedWatch tool.

Gold, which performs better in a low-interest-rate environment, has seen diminished buoyancy amidst increasing economic uncertainty. With a potential government shutdown looming and the release of official economic data at risk, investors are turning to non-official reports, such as the ADP National Employment Report due on Wednesday.

Analyst Rhona O’Connell from StoneX noted that “gold is losing some froth while still pricing in concerns over Fed independence and the possibility of stagflation, as well as underlying geopolitical risk and international tensions.” This year, gold prices have soared by 53% but have seen a decline of more than 9% from a record high on October 20.

In other metals, spot silver also dropped 1.5% to $47.32 per ounce, while platinum was down 1.8% at $1,538.05 and palladium fell 3.1% to $1,400.30.