Precious metals retreated sharply in early U.S. trading Friday, as the optimism for a possible December interest rate cut from the Federal Reserve weakened significantly toward the end of the week. A wave of profit-taking by short-term futures traders, paired with soft long liquidation, added notable downward pressure on both gold and silver.
In early trading, December gold slipped $75.50 to $4,119.00, while December silver fell $1.53 to $51.63—a stark reversal after recent strength.
Market Sentiment Takes a Hit After Fed Pushback
Thursday’s strong selling carried into overnight trade for U.S. equities, ending the rally that had been supported earlier in the week by optimism surrounding a potential U.S. government reopening. Instead, traders were confronted with a series of hawkish comments from multiple Federal Reserve officials, which rattled confidence just ahead of a heavy slate of economic data releases.
According to a Bloomberg report, money markets now price the likelihood of a December rate cut at under 50%, reflecting the market’s shift toward caution. With shutdown-related optimism already priced in, concerns resurfaced over the lofty valuations of major tech stocks—prompting a broad sell-off led by the sector’s biggest names.
Fed officials reinforced the cautious tone:
- Alberto Musalem, President of the St. Louis Fed, said policymakers should act prudently with inflation still above its target.
- Beth Hammack of the Cleveland Fed emphasized that monetary policy needs to remain “somewhat restrictive.”
- Neel Kashkari, President of the Minneapolis Fed, reiterated that he did not support the last rate cut and remains undecided about December.
Market strategist Matt Maley of Miller Tabak + Co. summed up the sentiment: elevated markets rely on the prospect of lower rates, and the sudden uncertainty—paired with a wave of incoming data—has heightened fear across the marketplace.
Global Developments Add to the Cross-Currents
In international news, the White House announced Thursday that the U.S. has reached a bilateral agreement with Argentina to expand trade and investment ties. The deal will allow both countries to open their markets to one another’s key exports, with Argentina offering preferential access for U.S. goods including medical devices, IT products, machinery, and pharmaceuticals. Additional trade frameworks were also announced with El Salvador and Ecuador, highlighting Washington’s broader push for regional economic cooperation.
Meanwhile, economic momentum in China weakened more than expected early in the fourth quarter. Bloomberg reported that fixed-asset investment dropped 1.7% over the first ten months of the year, while industrial output rose 4.9%—the slowest pace in 2024. Despite a trillion-yuan stimulus package approved since late September, domestic demand has yet to respond meaningfully, and borrowing remains subdued.
Bloomberg Economics noted that while October’s slowdown may be partially exaggerated by holiday distortions, the overall picture shows a softening trend heading into year-end—though not severe enough to trigger fresh stimulus for now.
Key Outside Markets
- U.S. Dollar Index: Slightly firmer
- Crude Oil: Near $59.50 per barrel
- 10-Year Treasury Yield: Around 4.13%
These external markets continue to influence metals pricing, particularly as traders monitor the dollar’s strength and bond-market reactions to shifting Fed expectations.
Spot vs. Futures: Understanding the Current Gold Pricing Environment
The global gold market operates through both spot and futures pricing systems.
- The spot market reflects prices for immediate delivery.
- The futures market establishes contract prices for later settlement.
With year-end hedging and repositioning underway, December gold futures remain the most liquid and heavily traded contract on the CME.
Technical Outlook: Gold
December gold futures still retain a bullish longer-term structure, though short-term momentum has weakened.
- Upside objective for bulls: Close above the record high at $4,398.00
- Downside objective for bears: Push below $4,000.00 support
- Resistance: $4,200.00, then $4,215.10
- Support: $4,100.00, then $4,050.00
- Wyckoff’s Market Rating: 7.0
Technical Outlook: Silver
Despite the pullback, December silver futures still hold a strong near-term technical advantage.
- Upside target for bulls: Break above the record high at $54.415
- Downside target for bears: Close below solid support at $50.00
- Resistance: $52.00, then $53.00
- Support: $51.00, then $50.00
- Wyckoff’s Market Rating: 8.0
