Federal Reserve Policy Shift Rattles Gold Markets

Gold prices experienced a significant downturn as hawkish commentary from the U.S. Federal Reserve triggered a market selloff. The precious metal declined more than 3% during Friday's trading session, settling at $4,092.72 per ounce. Market participants are increasingly skeptical about potential December interest rate cuts, diminishing the appeal of non-yielding gold assets.

The sharp decline reflects growing concerns about monetary policy direction. Current market pricing indicates just a 46% probability of a 25-basis-point rate cut in December, down significantly from earlier week expectations of 50%. This reassessment creates substantial headwinds for gold, as rising interest rates elevate the opportunity cost of holding assets that generate no yield.

Friday's trading saw spot gold drop over 3%, while December futures contracts retreated 2.4% to $4,094.20. Despite the substantial single-day decline, gold maintained a weekly gain of 2.3%, highlighting the volatility in current market conditions.

Key Market Levels and Technical Position

• Critical Support: The $4,090 level emerged as crucial technical support during the selloff
• Weekly Performance: Despite Friday's pressure, the metal remained positive for the week
• Policy Expectations: Rate cut probability collapsed to 46% from previous levels

Economic Data Vacuum Complicates Outlook

The longest government shutdown in U.S. history has created substantial uncertainty for market participants. Federal Reserve officials and traders face significant information gaps ahead of the next policy meeting, with key economic indicators potentially unavailable. Critical datasets, including October employment figures, may never see publication, adding another layer of complexity to gold market analysis.

Should investors sell immediately? Or is it worth buying Gold?

Asian Demand Weakens Amid Broader Sector Pressure

Physical gold demand in key Asian markets continues to disappoint. Indian markets registered the most substantial discounts in five months, reflecting tepid regional interest. The weakness extended across precious metals, with silver falling 2.8% to $50.84, platinum declining 2.1% to $1,547.30, and palladium dropping 2.8% to $1,387.25.

Market analyst Fawad Razaqzada observed, "When margin calls and liquidations occur, traders unwind positions across the board to create breathing room. This explains why even gold is declining in this risk-off environment."

The breach of the $4,090 support level indicates clear downward momentum. Without expectations for imminent rate cuts, gold currently lacks the fundamental catalyst needed to reverse its fortunes.