Gold prices saw a slight decline on Wednesday, attributed to a small rise in the dollar. However, the expectation of a potential interest rate cut by the U.S. Federal Reserve in the first half of next year kept gold near a seven-month high. Spot gold decreased by 0.1% to $2,039.69 per ounce, while U.S. gold futures for December delivery saw a 0.1% increase to $2,040.90 per ounce. The dollar index rose by 0.1% against its rivals, but the U.S. dollar was set for its poorest monthly performance in a year, which increased its appeal to holders of other currencies.
Yields on 10-year Treasury notes also dropped to a two-month low. There is now a 70% probability of rates easing in May, up from 50% on Tuesday, according to the CME’s FedWatch Tool. This anticipation of lower rates decreases the opportunity cost of holding non-interest-bearing bullion, which is positive for gold prices.
Investors are anticipating the revised U.S. third-quarter GDP figures and key PCE data, the Fed’s preferred inflation gauge, which are due to be released soon. In addition, spot silver and platinum saw a decline, while palladium also dropped in value.