Gold Prices Slide as Fed Rate Cut Odds Dim, But Weekly Gains Remain Intact

Gold gave up some ground on Friday, retreating after earlier gains as traders dialed down their hopes for a Federal Reserve rate cut in December. Spot gold slipped about 1.4% to $4,112 an ounce, while December gold futures dropped nearly 1.9% to $4,114.

Market sentiment shifted following a series of hawkish remarks from Fed officials. Minneapolis Fed President Neel Kashkari openly opposed last month's rate cut and remains uncertain about December. Similarly, Alberto Musalem of St. Louis Fed and Cleveland Fed's Beth Hammack have voiced concerns about loosened policies amid still elevated inflation levels.

The lingering effects of a prolonged 43-day government shutdown have clogged up crucial economic data releases, forcing the Fed to navigate December's policy meeting without complete information. Analysts at ANZ highlighted that delays could keep officials cautious in the near term.

As a result, markets now price in a roughly 50% chance of a 25 basis point rate cut next month, down from nearly 68% last week, according to CME Fedwatch data. This drop in Fed easing expectations has put a damper on gold, which doesn't yield interest and often trades inversely to bond yields.

Still, the metal is on track for its first weekly gain in four weeks, largely buoyed by safe-haven demand amid economic uncertainty. Gold reclaimed and held above the psychologically important $4,000 level this week, gaining about 3% as traders grappled with the unclear outlook for the U.S. economy.

The government shutdown's end should restore the flow of economic reports soon, but some on Wall Street worry the data might reveal that the U.S. economy took a harder hit than expected. Meanwhile, a legal cloud hangs over tariffs introduced under President Donald Trump. The Supreme Court is weighing challenges that could invalidate these duties, which Trump warned might force the government to return over $2 trillion in tariff revenue-a scenario he called a national security disaster.

Other precious metals headed lower on Friday but remain positive for the week. Spot platinum slipped nearly 4% to about $1,550 an ounce, while silver gave back 3.2% but still climbed 7% for the week, nearly touching October's highs.

This pattern of volatility comes as traders balance mixed economic signals, Fed rhetoric, and geopolitical developments. Gold's short-term retreat contrasted with its weekly resilience highlights how markets continue to wrestle with conflicting pieces of the puzzle heading into year-end.