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Gold rebounded near the $4,000-an-ounce level on Wednesday as investors sought safety in the safe-haven metal following a slump in global stocks.
Spot gold rallied as much as 1.5% to $3,989.53 an ounce, having fallen almost 2% the previous session. US gold futures also gained 1% to $3,996.50 per ounce.
Gold’s recovery follows new US jobs data showing a more-than-expected rise in private employment. A strong labour market typically reduces the likelihood of interest rate cuts, resulting in weakness in gold and equities.
Last week, when the US Federal Reserve made its latest round of rate cuts, chair Jerome Powell indicated that this could be the final reduction in 2025. Currently, traders see a 62% chance of another rate cut in December, down from over 90% last week, according to Reuters.
Consolidation phase
Gold has risen by about 50% so far this year, buoyed by expectations of lower interest rates and robust central bank buying. Prices touched a record last month before a sharp pullback, as many had signaled that its ascent had been too rapid.
The market is now trying to assess whether the metal’s decline has run its course.
“It should not be a big surprise to see the yellow metal consolidate in a lower, $3,800-to-$4,050-an-ounce trading range,” TD Securities strategist Bart Melek said in a note, citing factors including ambiguities over the outlook for Fed rate cuts, as well as concerns over retail buying in China.
Still, the factors that contributed to gold’s gains this year are still mostly intact, and elevated buying by global central banks and strong demand from private investors should send prices back up after the consolidation phase, Melek added.
“The tone during this time has shifted from exuberance to reflection, with traders reassessing how much of the 2025 narrative — rate cuts, fiscal stress, geopolitical hedging and central bank demand — has already been priced in,” Ole Hansen, commodities strategist at Saxo Bank, wrote in a note.
(With files from Bloomberg and Reuters)
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