Price of Gold Falls as Traders Bet on Slower Pace of Interest Rate Cuts

The price of gold is retreating from the record highs seen in September as futures traders bet on smaller interest rate cuts from the U.S. Federal Reserve.

A strong U.S. labor report for the month of September has futures traders revising their expectations for interest rate cuts this year and next. Traders are now betting 90% that the U.S. central bank will lower rates by 25-basis points at its next policy meeting on November 7.

The lowered expectations have gold trading at $2,668.70 per ounce, down about 1% since the U.S. jobs report was released last Friday (October 4). Gold reached several all-time highs in late September after the Fed lowered interest rates by 50-basis points and indicated that more cuts are on the way.

Gold hit an all-time high of $2,685.42 an ounce on September 30.

Other Precious Metals Also Decline

Gold has benefitted this year from increased buying among central banks around the world. The precious metal that’s used to make jewelry is viewed as a safe haven asset in times of economic and geopolitical uncertainty. Gold also benefits from lower interest rates as they reduce the opportunity cost of owning the yellow metal.

Gold is not alone in its current pullback. Other precious metals are also retreating, with platinum’s price falling 0.5% to $997.05 an ounce and silver slipping 0.1% to $32.36 an ounce. Like gold, silver has enjoyed a great run this year. While it’s not at an all-time high, silver’s price is currently at its highest level in 12 years. Silver’s 35% year-to-date gain has outpaced the 28% increase in gold so far in 2024.

Silver’s record price of $48.70 an ounce was achieved back in 1980.

A Look at the SPDR Gold Trust ETF

The SPDR Gold Trust ETF (GLD) that tracks the spot price of gold bullion has risen 28% in 2024, mirroring the gains in gold’s price. There are no analyst ratings on this exchange-traded fund. However, the price of the GLD ETF has gained 42% over the last 12 months.