By Ishaan Arora
(Reuters) -Gold retreated towards $4,000 an ounce on Friday as uncertainty over another U.S. rate cut in December helped keep the dollar near three-month highs, but held on track for its third straight monthly gain.
Spot gold was down 0.4% at $4,009.24 per ounce at 1147 GMT, having gained nearly 4% so far this month. U.S. gold futures for December delivery were up 0.1% at $4,020.80 per ounce.
The dollar index held near its highest in three months, making greenback-priced bullion more expensive for other currency holders. [USD/]
“Gold is under pressure as the dollar has been strengthening on the back of those hawkish remarks (by Fed Chair Jerome Powell),” said ActivTrades analyst Ricardo Evangelista. Markets had been taking another rate cut in December for granted, he said.
On Wednesday, the Fed cut interest rates by 25 basis points for the second time this year, taking the benchmark overnight rate to a target range of 3.75%–4.00%.
Following the decision, Powell said officials were struggling to reach a consensus about what lies ahead for monetary policy and cautioned that markets should not assume another rate cut in December.
Markets now price in a 67% probability of a 25-bp cut compared with a 91.1% chance a week ago, CME Group’s FedWatch tool showed, after Chair Powell’s remarks.
Safe-haven demand has also been dented on trade-related optimism following trade talks between the U.S. and China this week.
On Thursday U.S. President Donald Trump said he had agreed to trim tariffs on China in exchange for Beijing cracking down on illicit fentanyl trade, resuming U.S. soybean purchases and keeping rare earths exports flowing.
The macro-economic background remains supportive of gold in the medium to long term, with ongoing geopolitical turbulence in Ukraine and the Middle East, and between the U.S. and China, Evangelista added.
Elsewhere, spot silver rose 0.2% to $49.02 per ounce, platinum lost 0.9% to $1,596.60, and palladium gained 1.1% at $1,460.95.
(Reporting by Ishaan Arora in Bengaluru. Editing by Jan Harvey)
