Emre Yumlu 
The recent remarks by Fed Chair Jerome Powell have significantly cooled market expectations for further interest rate cuts. With the U.S. dollar regaining strength, gold prices are finding it difficult to establish a clear direction. Additionally, easing tensions between the U.S. and China have dampened safe-haven demand, further limiting gold’s upside momentum.
Gold Prices Hover in a Tight Range
Spot gold traded at $4,002 an ounce on the first trading day of the week. Prices have fallen nearly 10% since the record high of $4,381.21 hit on Oct. 20, as the dollar index climbed to a three-month high, adding pressure on gold.
Analysts: Dollar Strength Keeps Gold Under Pressure
According to Kelvin Wong, Senior Market Analyst at OANDA, gold’s lack of upward momentum aligns with current technical indicators. “Gold is showing signs of exhaustion on the upside, while the dollar remains remarkably resilient — this combination is limiting gold’s potential recovery,” Wong stated.
On October 29, the Federal Reserve implemented its second 25-basis-point rate cut of the year. However, Powell’s latest comments prompted traders to scale back expectations for another rate cut in the near term. Data from the CME FedWatch Tool shows that the probability of a rate cut in December has fallen from 90% to 71%, signaling growing caution among investors.
Focus Shifts to Key Economic Data
Gold traditionally benefits during periods of low interest rates and heightened uncertainty. Yet, the current market sentiment indicates a renewed appetite for risk. This week, investors are closely monitoring the ADP private employment report and ISM Manufacturing PMI data for further clues on the Fed’s policy trajectory.
Meanwhile, geopolitical developments are also influencing sentiment. U.S. President Donald Trump recently announced a trade deal with Chinese President Xi Jinping, covering issues such as the illegal fentanyl trade, U.S. soybean imports, and rare earth exports. This agreement has reduced geopolitical uncertainty and encouraged a shift back toward riskier assets, weakening safe-haven demand for gold.
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