The price of gold continues to slide lower as hopes fade for the U.S. Federal Reserve to deliver an interest rate cut in December.
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Futures markets are now pricing in a 46% chance that the U.S. central bank lowers rates by 25 basis points at its Dec. 10 policy meeting. That’s down from 67% a week ago and greater than 90% at the end of October, according to market data.
As expectations for a December rate cut evaporate, it is putting pressure on the price of gold. Lower interest rates typically serve as a tailwind for gold as they reduce the opportunity cost of owning the precious metal.
Gold’s Fading Fortunes
Gold is now trading at $4,050.00 an ounce. That’s down from an all-time high of $4,379.13 an ounce reached on Oct. 17 of this year. Until mid-October, gold had rallied more than 60% on the year, hitting multiple record highs in the process.
The bull market in gold had been driven by heavy buying on the part of both central banks and retail investors, each of whom was loading up on bullion amid rising geopolitical uncertainty. As a store of value, gold is often seen as a safe haven investment in times of instability.
Is the SPDR Gold Shares ETF (GLD) a Buy?
Most Wall Street analysts don’t offer ratings or price targets on the SPDR Gold Shares ETF. So instead we’ll look at the exchange-traded fund’s year-to-date performance. As one can see in the chart below, the GLD ETF is up 55% on the year.
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