Gold was dragged sharply lower on Friday, tumbling more than 3% in a broad market rout that swept through equities, crypto and commodities. Unlike stocks, which later clawed back a chunk of their losses, gold failed to regain ground, leaving the metal on the back foot heading into the new week.
Spot gold dropped to around $4,095 after touching $4,245 earlier in the week. Futures were also hit, with December contracts sliding more than 2%. The sell-off began after a cluster of hawkish comments from Federal Reserve officials dimmed hopes for a December rate cut, prompting traders to reassess rate expectations that had steadily built over recent weeks.
Markets also continue to grapple with the fallout from the recently ended US government shutdown. The 43-day closure has left a sizeable hole in the data calendar, meaning both traders and policymakers are heading into the December meeting with little clarity on how the economy actually performed in October. Hopes that fresh releases would confirm a cooling economy have faded, especially as more Fed officials caution against further easing.
Rate-cut probabilities have been slashed accordingly. Markets now see roughly a 53% chance of a 25-basis-point cut, down from 64% earlier in the week. With expectations being unwound, gold lost a key pillar of support.
The sell-off was also influenced by positioning. A sharp move lower in equities sparked pockets of forced selling, pushing some traders to liquidate even traditionally defensive holdings to meet margin calls. This added another layer of pressure on gold, blunting its usual safe-haven role during bouts of market stress.
Physical demand offered little help. Buying interest across key Asian markets remained muted, giving the metal no cushion against the cross-asset pullback.