Gold Edges Down As U.S. Fed Rate Cut Expectations Recede

(RTTNews) - Gold prices moved lower on Thursday as investors further scaled down their expectations for another U.S. Federal Reserve interest rate cut in December as they parsed today's U.S. non-farm payrolls data.

Front Month Comex Gold for November delivery declined by $21.20 (or 0.52%) to $4,056.50 per troy ounce.

Front Month Comex Silver for November delivery tumbled by 54.30 cents (or 1.07%) to $50.247 per troy ounce.

Instituting the second rate cut in 2025 on October 29, the U.S. Federal Reserve lowered interest rates by 25 basis points to the current 3.75% to 4.00% range.

Minutes of the Federal Open Market Committee meeting from October were released yesterday, revealing that the members were sharply divided on their perspectives on the need for another rate cut in December as they observed consistency in the economic indicators and focused on the rise in inflation.

Two of the members had voted against the decision. While one member preferred a 50-basis-point reduction instead of the 25-basis-point cut, the other wanted to leave the target rate unchanged.

All members had reaffirmed their commitment to Fed's dual mandate of ensuring maximum jobs as well as the goal of containing inflation at 2%.

Of note, U.S. Federal Reserve Chair Jerome Powell had emphasized after last month's announcement that another rate cut in December is "not a foregone conclusion."

Today, the U.S. non-farm payrolls data was released by the Bureau of Labor Statistics, showing showed an increase of 119,000 jobs in September (against an expected 50,000), rebounding from a revised 4,000 decline in August. Notably, it is the biggest increase in five months.

Meanwhile, the unemployment rate crept up to 4.4% in September from 4.3% in August. Of note, this would be the last unemployment print before the December Fed's meeting as the department had announced that October's jobs report will not be released.

Annual wage inflation, as measured by the change in the average hourly earnings held steady at 3.8%.

The Department of Labor's data for the week ending November 15 showed that initial jobless claims fell by 8,000 from the previous week to 220,000, while the four-week moving average of jobless claims dipped to 224,250.

For next month's Fed's meeting and monetary policy decision making, today's nonfarm payroll data is a crucial parameter. Even as the report showed some weakening in the labor market, analysts feel that the print may have only a restricted influence on the Fed's decision as it is a delayed release.

A low-interest-rate environment increases the demand for non-yielding assets like gold.

CME Group's FedWatch Tool is currently indicating that investors are betting on a 39.4% chance of a 25-basis-point interest rate cut at the Federal Reserve's upcoming meeting on December 9-10.