Gold Slips as Traders Assess Fading US Interest Rate Cut Outlook

Core Insights - Gold prices have steadied around $4,080 per ounce as traders reassess the likelihood of a US Federal Reserve interest rate cut, which is currently seen as less probable until more economic data is available [1][2][4] Market Dynamics - Gold has experienced a pullback of over 2% in the previous session, with traders losing confidence in a potential December rate cut as Federal Reserve officials show reluctance to lower borrowing costs [2][4] - Interest rate swaps indicate a less than 50% chance of a rate cut in December, a significant drop from the previous month when a quarter-point reduction was almost fully priced in [4] Economic Context - The prolonged US government shutdown has delayed critical economic data, leading to uncertainty among investors and policymakers regarding the labor market and inflation [4][5] - Analysts note that the recent decline in gold prices is exacerbated by subdued physical demand, particularly in Asia, where Indian dealers are offering significant discounts due to market volatility [5] Performance Metrics - Despite recent fluctuations, gold is up approximately 55% year-to-date and is on track for its best annual performance since 1979, driven by strong central bank purchases and investor interest as a hedge against fiscal uncertainties [6]