Gold falls below $4,000 as the dollar rises and interest rate cut bets increase

Gold prices continued to decline today, Tuesday, to trade below the level of $4,000 per ounce, with the US dollar remaining near its highest levels in three months, while the decline in the prospects of another cut in US interest rates in December, and the decline in trade tension between the United States and China, weakened demand for the yellow metal.

Gold in spot transactions fell 0.2% to $3,992.23 per ounce by 03:43 GMT, while US gold futures for December delivery fell 0.3% to $4,001.40 per ounce.

The dollar stabilized near its highest level in three months, as the division of the Federal Reserve (the US central bank) prompted traders to reduce their bets on lowering interest rates, according to Reuters.

Tim Waterer, chief market analyst at KCM Trade, said: “The strength of the dollar represents a thorn in gold’s side, as traders recalculate the possibility of another interest rate cut by the end of the year.”

The Federal Reserve lowered interest rates last week for the second time this year, but its Chairman, Jerome Powell, said that making another cut in 2025 was “not a foregone conclusion.”

According to CME’s Fed Watch tool, markets now expect another 65% rate cut in December, down from more than 90% before Powell’s comments.

Gold, which does not generate a yield, typically benefits from low interest rates and periods of economic uncertainty.

This week, investors are awaiting important economic data, including ADP data on employment in the United States, in search of new indicators related to the direction of interest rates.

“If ADP data disappoints again, this may give gold an opportunity to recover some of its gains,” Waterer said.

Gold has risen 53% since the beginning of the year, but has fallen by more than 8% from the record level it recorded on October 20.

US President Donald Trump announced last week that he had agreed to reduce customs duties on China in exchange for concessions from Beijing.

As for other precious metals, silver rose in spot transactions 0.1% to $48.12 per ounce, platinum increased 0.1% to $1566.60, while palladium fell 1% to $1430.31.