Gold prices fall as dollar strength pressures market

Gold prices fell on Thursday as the U.S. dollar strengthened, prompting investors to take stock of economic data that showed slow progress in controlling inflation.

This raises concerns that the Federal Reserve may be cautious with interest rate cuts in the future. Spot gold fell 0.3 percent to $2,627.60 an ounce, while U.S. gold futures fell 0.5 percent to $2,627.00. The dollar index rose 0.1 percent, making gold less attractive to holders of other currencies.

Market attention is focused on the Fed’s next steps, with recent core personal consumption expenditures (PCE) data pointing to slower inflation. According to Calvin Wong, senior market analyst at OANDA, this suggests that the Fed’s policies may be less accommodative in 2025 than expected. The Fed’s challenge to bring inflation back to its 2% target, along with potential tariffs under the incoming Trump administration, could limit the central bank’s ability to cut rates further.

Markets currently see a 64.7 percent chance of a quarterly rate cut in December, according to CME Group’s FedWatch tool. Meanwhile, Mexican President Claudia Schönbaum has warned of possible retaliation if Trump imposes a 25 percent tariff, citing potential losses of American jobs and higher consumer prices over economic or geopolitical risks including trade wars. Sleep is a safe haven during times of instability.

Trading volume is expected to be light on Thursday due to the US Thanksgiving holiday. In the short term, gold prices may face further pressure, especially in the next few days to two weeks. However, Wong added that the long-term outlook for gold remains bullish. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.10 percent drop in its holdings to 878.55 metric tons on Wednesday.

Spot silver fell about 1% to $29.78 an ounce, platinum fell 0.1% to $928.05, and palladium was unchanged at $972.75.