By Polina Devitt
LONDON (Reuters) – Gold prices extended their decline to the fifth consecutive session on Tuesday under pressure from recent strong U.S. economic data, though safe-haven demand coming from tensions in the Middle East limited the drop.
Spot gold fell 0.1% to $2,641.63 per ounce by 0954 GMT.
Gold prices, up 28% so far this year, have been under pressure since Friday’s strong U.S. jobs report prompted markets to adjust estimates of the depth of future U.S. rate cuts.
According to the CME FedWatch tool, markets are no longer pricing in a 50-basis-point reduction at the Fed’s November meeting. They now see an 89% chance for a 25-bp cut.
The dollar eased from near seven-week highs on Tuesday, while investors awaited minutes of the Federal Reserve’s latest policy meeting, due on Wednesday, and more economic data for insights on the U.S. interest rate outlook. [FRX/]
Israel’s military said on Tuesday it had begun ground operations in southwest Lebanon, expanding its incursions to a new zone a year after exchanges of fire began with armed group Hezbollah and amid pleas by the U.N. for a diplomatic solution.
In China, where markets returned from the Golden Week holiday, benchmark PM gold price saw the worst post-Golden Week session since 2017 with a decline of 0.12%, said Hugo Pascal, precious metals trader at InProved.
Over the last seven years, the Chinese gold benchmark saw a growth of 0.63% on average after this annual holiday.
“While certain observers have claimed that Chinese were flocking to precious metals stores during the Golden Week, the data presents a contrasting narrative, highlighting ongoing weakness,” Pascal added.
Physical demand for gold in top consumer China has been muted in recent months with China’s central bank holding back on buying gold for its reserves for a fifth straight month in September. Gold in Shanghai continues to trade at a discount to the London benchmark.
Spot silver lost 1.4% to $31.26 per ounce, platinum was steady at $969.08 and palladium fell 1.5% to $1,008.50.
(Reporting by Polina Devitt in London; additional reporting by Ashitha Shivaprasad and Daksh Grover in Bengaluru; Editing by Mrigank Dhaniwala)
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