Gold price dips as US Fed interest rate cut expectations fall

Gold (GC=F)

Gold prices reversed a two-day gain as investors scaled back expectations for an interest rate cut from the US Federal Reserve next month.

Bullion was down 0.5% on Thursday, trading around $4,062 an ounce at the time of writing, after rising almost 1% in the previous two sessions.

It came after minutes of the October Fed meeting revealed that officials said it would likely be appropriate to keep rates steady for the rest of 2025. Swap contracts linked to the Fed policy rate now imply a 36% chance of a cut. Before Wednesday, the probability was about 50%.

Gold (GC=F) has rallied strongly this year, gaining more than 50% and hitting a record in October, before retracing some of its gains. The upward momentum has been supported by two earlier rate cuts from the Fed, as well as elevated central-bank buying, and inflows into bullion-backed exchange-traded funds (ETFs).

The combined value of global gold (GC=F) currently reserves stands around €4.22 trillion, an increase of 44.66% since December 2024, when gold traded at €2,508.39 per ounce.

Elsewhere, silver (SI=F) dropped toward $51 an ounce, while platinum (PL=F) and palladium (PA=F) were flat.

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Oil (BZ=F, CL=F)

Oil prices rose 0.7% on Tuesday as investors weighed up the fallout from US sanctions on Russia’s Rosneft and Lukoil that are set to take effect on Friday. It also comes as the European Union (EU) explores more measures to squeeze Moscow.

Brent (BZ=F) traded just above $63 a barrel after declining more than 2% on Wednesday, the most in a week, and West Texas Intermediate (CL=F) approached $60.

It comes as suitors are lining up to buy various parts of Lukoil’s international business following the penalties. Exxon Mobil Corp (XOM) officials met with Iraqi oil minister Hayyan Abdul Ghani on Wednesday to discuss the Russian company’s stake in the West Qurna 2 field, which accounts for 10% of Iraqi production.

Meanwhile, the EU is exploring more curbs on entities enabling Russia’s shadow fleet of tankers transporting oil in a further effort to disrupt Moscow’s ability to fund its war against Ukraine. The US penalties on Rosneft and Lukoil are also part of a fresh bid to end the conflict.

Oil (BZ=F, CL=F) is still heading for an annual loss on expectations for a surplus as OPEC, its allies and other producers ramp up output, though recent geopolitical tensions have added some risk premium to prices

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Pound (GBPUSD=X)

The pound pushed 0.1% higher against the US dollar as traders brace for the biggest UK bond sales since the COVID pandemic.

The Treasury is set to borrow £9bn more than expected this year amid mounting pressure on Rachel Reeves to balance the books in the budget next week.

According to a median estimate of dealers surveyed by Bloomberg, gilt sales are expected to top £308bn in 2025 — the highest amount of government debt issued since the pandemic in 2021.

The Debt Management Office will update its gilt sales forecast when the chancellor delivers the autumn statement on 26 November.

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It comes as borrowing costs have risen over the past week after Reeves U-turned on plans to increase income tax to fill an expected £20bn black hole in UK public finances.

Evangelia Gkeka, an analyst at Morningstar, said she expects borrowing costs to fall after the budget speech as weaker growth forecasts will increase the chances of the Bank of England (BoE) cutting interest rates.

She said: “The majority of managers believe the focus of the UK budget should not only be on increasing taxes from already high levels.”

“Bringing spending under control, they argue, is a better long-term solution and adds to long-term policy credibility.”

The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was higher, flat at 100.18.

The euro also weakened against the dollar (EURUSD=X), sinking 0.1% to $1.1526.

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