Solid Gold Berjangka – Global gold prices weakened for the second consecutive day during Asian trading on Friday (October 30), falling below the psychological level of US$4,000 per troy ounce. Pressure on XAU/USD intensified after U.S. economic data bolstered expectations that the Federal Reserve might raise interest rates again in December.
U.S. Gross Domestic Product (GDP) grew by 3.4% on an annualized basis in the third quarter, an increase from 2.2% in the previous quarter and surpassing market forecasts of 3.2%. Meanwhile, the Personal Consumption Expenditures (PCE) price index rose by 0.5% month-on-month and 3.6% year-on-year in September. The core PCE also climbed 0.3% month-on-month and 3.1% year-on-year, confirming that inflationary pressures remain elevated.
The combination of robust economic growth and persistent inflation strengthens the likelihood of further monetary tightening by the Fed. This environment weighs on gold—a non-yielding asset—even as U.S. government bond yields have declined, driven by investors seeking safe havens amid concerns over high corporate spending by technology firms on artificial intelligence development.
On the geopolitical front, growing optimism regarding a diplomatic resolution to the conflict in the Middle East has dampened safe-haven demand for gold. U.S. Vice President JD Vance reportedly reached out to Iranian security official Mohsen Rezaei, while Qatar has proposed a new framework for an agreement to reopen negotiation channels. Nevertheless, tensions between the Houthi group and Saudi Arabia, alongside the threat of further attacks by the U.S. and Israel, ensure that geopolitical risks remain high.
In the short term, downward pressure on gold is likely to persist as long as expectations for a December interest rate hike remain strong. Any recovery could face selling pressure should the U.S. dollar strengthen again; meanwhile, XAU/USD is currently on track for a decline of approximately 3.5% for the month of October. (srh)