Gold prices moved sideways as investors considered the statements of Federal Reserve (FED) officials and data showing a strong weakening of the US labor market, raising expectations for the possibility of interest rate cuts.
Spot gold prices remained almost unchanged, remaining below $4,000/ounce, after easing the gains achieved earlier in the session. The market fluctuated strongly at the beginning of the session on Thursday after a report from human resources consulting firm Challenger, Gray & Christmas Inc. showed the highest number of layoffs in October in the US in more than two decades. The USD has also weakened as a result.
Weaker employment data reinforces the case for the possibility of the Fed cutting borrowing costs, a factor that is often in the favor of gold non-interest-bearing assets. However, Chicago Fed President Austan Goolsbee said on Thursday that the lack of official inflation data during the US government's closure has made him "more concerned" about continuing the rate cut cycle.
In the context of the longest government shutdown in US history causing many official economic reports to be delayed, data released by private organizations such as Challenger is becoming important for the market, helping to assess part of the world's largest economic situation.
Gold prices are on track to record their strongest annual gains since 1979, after setting new records before falling slightly last month. US interest rate cuts have helped support gold prices, while capital flows into gold-backed ETFs along with increased purchases from central banks have also continued to drive the precious metal upward.
The Federal Open Market Committee (FOMC) the Feds interest rate-based policy maker is expected to hold its final meeting in 2025 next month.
Economists at Macquarie Group predict gold prices could fall next year, after rising as much as 50% since the beginning of the year. As global growth begins to recover, central banks monetary easing cycle nears an end, real interest rates remain relatively high and US-China tensions temporarily cool down, we believe gold has hit a short-term peak, Macquaries strategist group, including Chief Economist Ric Deverell, wrote in a report on Thursday.
However, Macquarie believes the decline will take place more slowly than previous correction cycles and gold prices will remain above the end of 2023 - around 2,000 USD/ounce - throughout President Donald Trump's term.
If geopolitical tensions escalate again or concerns about the size of US public debt arise, gold prices could increase strongly again, the banks economic experts said.
In New York at 4:14 p.m. yesterday afternoon, spot gold prices reached $3,980.61/ounce. Bloomberg Dollar spot index decreased by 0.3%. Silver prices are almost flat, while platinum and palladium both decreased.
