Gold Steadies as Market Weighs Chance of Another Fed Rate Cut

GC=F -0.37% SI=F -0.28% HG=F -0.61%

(Bloomberg) -- Gold steadied as traders weighed the chance of another Federal Reserve interest-rate cut before the end of the year.

Bullion traded near $4,070 an ounce, after a modest weekly loss. Several US central bank officials have recently sounded a cautious note on monetary policy, though New York Fed President John Williams said he sees room for a reduction in borrowing costs in the near term. Gold pared losses on Friday after Williams’ comments, but still ended the session lower.

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Meanwhile, copper also steadied on the London Metal Exchange, as traders waited for clues on the health of the US economy.

The US shutdown delayed the release of data the market would normally use to gauge the chances of a rate cut. September retail sales and producer-price data due Tuesday, as well as jobless claims on Wednesday, should provide some much-needed clues. Futures traders are pricing in an almost 70% chance of a quarter-point cut next month. Lower rates tend to benefit bullion as it doesn’t pay interest.

The rate-cut path “is rather hard to predict and a close call, hence gold will likely stay clustering around the current level,” said Ahmad Assiri, a strategist at Pepperstone Group Ltd. “I don’t see an imminent big move in gold, rather a perfect setup for two-way trades in a less volatile environment.”

The precious metal has been in a consolidation phase since surging to a record high above $4,380 an ounce in October. It’s still up around 55% this year, supported by heightened trade and geopolitical uncertainty, as well as concerns over deteriorating fiscal outlooks for many governments.

Spot gold was little changed at $4,072.55 an ounce as of 10:01 a.m. in London. The Bloomberg Dollar Spot Index was steady. Silver edged higher, while platinum steadied and palladium declined.

On the LME, copper futures were flat, while most other base metals on the exchange nudged higher.

--With assistance from Preeti Soni and Jack Ryan.

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