The recent decision by the US Federal Reserve to cut interest rates by 25 basis points, with a target range of 4.50%-4.75%, has further impacted gold's safe-haven status. Fed Chairman Jerome Powell's comments also suggested further rate cuts are on the horizon to counter economic pressures, potentially pushing up the dollar and impacting gold demand.
Traders are pricing in a 75% chance of another rate cut in December, according to CME Group's FedWatch tool, which would impact Treasury yields and drive capital out of non-yielding assets such as gold. There is a possibility.
Investor sentiment changes based on economic indicators
Risk-on sentiment across the market contributed to gold's decline, spurred by optimism over US Federal Reserve support and potential fiscal action from China.
Traders are keeping an eye on upcoming U.S. economic data, including the Michigan Consumer Confidence Index and the Inflation Expectations Report, for indicators of near-term market direction.
These data points can influence the strength of the dollar and, in turn, the attractiveness of gold.
China's economic power and trade friction
Globally, China's trade surplus expanded significantly in October to $95.27 billion, with exports increasing by 12.7% year-on-year, but imports decreasing by 2.3%.
