Gold prices drop but still record third consecutive increase

World gold prices fell 1% in the trading session at the end of the week, under pressure from uncertainty about whether the US Federal Reserve (FED) will continue to cut interest rates this year. However, the precious metal still recorded the third consecutive month of increase.

The US dollar index remains near a three-month high, making gold - priced in greenback - more expensive for investors holding other currencies.

Ms. Beth Hammack, Fed president of the Cleveland branch, said she opposed the decision to cut interest rates this week, emphasizing that the Fed still needs to maintain a tight monetary policy to curb inflation.

ba Hammacks speech is putting great pressure on gold prices, as she became the third regional Fed president to openly protest the continued interest rate cut in the context of high inflation. She will have the right to vote in the Open Market Committee (FOMC) in 2026, and this shows that the market is too optimistic about the prospect of a rate cut," said Tai Wong, an independent metals trader.

Although the Fed cut interest rates on Wednesday, Chairman Jerome Powell's "hawlish" statements have prompted the market to adjust expectations.

According to the CME FedWatch tool, the possibility of the FED continuing to cut interest rates in December is now only 63%, down sharply from more than 90% at the beginning of the week.

Gold prices often lose their appeal when interest rates increase, because this is a non-yielding asset. However, the precious metal has continued to increase by 53% since the beginning of the year, reaching a record $4,381.21/ounce on October 20.

Morgan Stanley believes there is still room for gold prices to increase in the coming time, supported by the trend of interest rate cuts, capital flows into ETFs, central bank gold purchases and global economic instability. The bank forecasts that the average gold price will reach 4,300 USD/ounce in the first half of 2026.

In another development, US President Donald Trump said on Thursday that he would reduce import tariffs on Chinese goods from 57% to 47%, in exchange for Beijing's commitment to control the trade of fentanyl, resume soybean imports and maintain rare earth exports.

Forecasting gold prices next week, Mr. Colin Cieszynski - Director of Market Strategy of SIA Wealth Management commented: "I maintain a neutral view on gold prices next week. I think this precious metal still needs more time to adjust and accumulate.

Meanwhile, Mr. Rich Checkan - Chairman and CEO of Asset Strategies International, has a more cautious view:

I think gold prices will fall. Although there is no doubt about the long-term uptrend, in the short term, gold seems to lack the motivation to reach new highs. Some people believe that this comes from tensions with cooling down China. Others believe the reason is Fed Chairman Jerome Powell's more "happy behavior", causing the market to begin to doubt the possibility of a rate cut in December. There are also opinions that this is the result of profit-taking activities or even a concerted effort by paper traders to reduce gold prices".

Whatever the cause, I believe this adjustment is temporary, but it is not over yet, Checkan added. Prepare for another test below $4,000/ounce.