Gold rally cools as dollar holds ground

Gold slipped on Tuesday after hitting an all-time high in the previous session as the US Dollar (USD) regained footing and investors refrained from making big bets ahead of key U.S. jobs data that could offer more clarity on US interest rate path.

Spot gold was down 0.4% at $2,018.29 per ounce by 9:45 a.m. ET (1445 GMT). Bullion had climbed to a record high of $2,135.40 on Monday, before dropping more than $100 in a single day to close 2% lower.

U.S. gold futures fell 0.3% to $2,036.80.

Gold bulls are exhausted and hitting a pause after the rally, said Jim Wyckoff, senior analyst at Kitco Metals.

“Fundamentally, the rebound in the US dollar index this week has been a negative outside market influence … but the $2,000 level is probably going to be the near-term floor under the gold market.”

The dollar rose 0.2% to hover near more than one-week high, making gold more expensive for other currency holders.

After dovish comments from Federal Reserve officials, including the Chair Jerome Powell, traders are now pricing in 61% chance of a rate cut of at least 25 basis points in March and 87% in May, according to the CME FedWatch tool.

Lower interest rates make holding non-interest-bearing bullion more attractive due to reduced opportunity costs.

“We only expect the (gold) price to rise lastingly to $2,100 per troy ounce in the second half of 2024, when the Fed begins lowering its interest rates” Commerzbank said in a note.

The monthly JOLTS showed U.S. job openings fell to 8.73 million in October from a revised 9.35 million in September, signaling slowing labor demand.

Investors are also on the watch for private-sector ADP survey due on Wednesday ahead Friday’s U.S. non-farm payrolls report for November.

Spot silver lost 1.1%, to $24.22 per ounce, platinum eased 2.2%, to $896.17 , while palladium slipped 2%, to $956.84 per ounce.