Dollar drifts higher ahead of U.S. government reopening
Investing.com-- Gold prices fell in Asian trade on Wednesday, cooling after a two-day rebound as risk appetite was aided by optimism over an end to the longest ever U.S. government shutdown in the coming days.
Doubts over the Federal Reserve’s plans to cut interest rates further also weighed on gold, as the dollar found its footing in Asian trade. Markets were also watching the Supreme Court’s scrutinizing of U.S. President Donald Trump’s trade tariffs, although a ruling appears unlikely in the near-term.
Spot gold fell 0.5% to $4,108.36 an ounce, while gold futures for December fell 0.1% to $4,114.30/oz by 23:42 ET (04:42 GMT).
Among broader precious metal prices, spot platinum fell 0.2% to $1,583.90/oz, while spot silver fell 0.3% to $51.1075/oz, also seeing some losses after strong gains earlier this week.
US House to vote on ending government shutdown
Risk appetite improved this week after the U.S. Senate approved a measure aimed at unlocking government spending and ending the longest ever government shutdown.
The bill will now head to the House of Representatives for further approval, with the Republican-controlled body having signaled it will approve the bill on Wednesday. After this, it will head to Trump to be signed into law.
Optimism over an end to the shutdown– which entered its 42nd day on Tuesday– spurred some gains in risk-driven markets, which in turn sapped safe haven demand for gold.
But the yellow metal still remained pinned about the coveted $4,000/oz level, aided by uncertainty over U.S. interest rates and trade tariffs.
December rate cut in focus, econ. data releases awaited
Uncertainty over U.S. interest rates helped spur some demand for gold this week, as did the Supreme Court criticizing Trump’s trade tariffs.
The Wall Street Journal’s Nick Timiraos said there was a growing rift among Federal Reserve policymakers over whether to cut interest rates in December, with delayed economic readings for September and October adding to this friction.
The end of the government shutdown will open the door for more official economic data releases, which could in turn help quell some uncertainty over the economy.
Gold was dented by diminished expectations for a December rate cut. But a swathe of private labor market readings in recent weeks dialed up expectations for a December cut.
Markets are pricing in a 62.4% chance for a 25 basis point cut in the Fed’s December 10-11 meeting, up from a 57.8% chance seen yesterday, CME Fedwatch showed.