Gold prices experienced a 1 percent decline on Friday, impacted by uncertainty surrounding the possibility of another US Federal Reserve interest rate reduction this year. However, the metal was still set for a third consecutive monthly increase. At 1:49 p.m. ET (1749 GMT), spot gold dropped by 0.6 percent to $4,001.74 per ounce and was heading towards a 3.7 percent gain for the month. US gold futures for December delivery concluded 0.5 percent lower at $3,996.5 per ounce.
The dollar index remained close to a three-month peak, causing gold priced in US dollars to be more costly for holders of other currencies. Federal Reserve Bank of Cleveland President Beth Hammack expressed her dissent on Friday regarding the central bank’s decision to lower interest rates this week, emphasizing the need for some restraint to combat inflation. Independent metals trader Tai Wong remarked, “Hammack’s stance is influencing gold as she joins other regional Fed Presidents in opposing further rate cuts due to rising inflation expectations.”
Although the Federal Reserve decreased interest rates earlier in the week, comments from Chair Jerome Powell with a more hawkish tone led to a shift in market expectations. The CME FedWatch tool indicated a reduced probability of an interest rate cut in December, dropping from over 90 percent to 63 percent. Gold tends to lose attractiveness in high-interest rate environments as it is a non-interest-bearing asset. This year, the metal has surged by 53 percent, reaching a peak of $4,381.21 on October 20.
Morgan Stanley shared its outlook on Friday, projecting further upside for gold driven by interest rate cuts, ETF inflows, central bank acquisitions, and persistent economic uncertainties. The bank anticipates gold to average $4,300 in the first half of 2026. Additionally, US President Donald Trump announced his intention on Thursday to reduce tariffs on China from 57 percent to 47 percent in exchange for Beijing intensifying efforts to combat illicit fentanyl trade, recommencing US soybean purchases, and ensuring the continuity of rare earths exports.