Gold falls, FOMC in focus

Gold prices dip below $2000 post-strong US labor market data

By Nadia Elbilassy | @Nadia Elbilassy | 11 December 2023

Market close
  • Chinese yuan falls over 0.4% due to prolonged disinflation and fastest consumer price index decline in three years.

  • Gold prices dip below $2000 post-strong US labor market data, with traders adjusting positions on reduced expectations of a Fed rate cut in early 2024.

  • Oil prices edge lower with Brent crude at $75.81 and U.S. West Texas Intermediate near $71.33 after seven weeks of consecutive declines.

On the Market Watch!

The Yuan

The Chinese yuan fell more than 0.4% after data showed that China continued to experience disinflation for the second consecutive month. The consumer price index inflation in the country fell at its fastest pace in three years. Despite stronger than usual daily midpoint fixes by the People’s Bank of China, the yuan continued to weaken with lack of policy support.

Gold takes a dip

Following Friday’s stronger-than-expected NFP data, reflecting a strong US labor market, an intense sell-off was triggered on gold prices. The yellow metal dropped below the $2000 to hover near $1995.

Traders have adjusted their positions, reducing bets on the Federal Reserve cutting interest rates in early 2024. Fed Fund futures prices now indicate a 43% probability of a 25-basis point cut in March, down from previous expectations that exceeded 60%.

Meanwhile, Focus turns to the Federal Reserve on Wednesday which is widely expected to maintain current interest rates.

Oil prices

Oil prices edged lower amid ongoing concerns about a surplus of crude despite efforts by OPEC+ to implement production cuts and expectations of subdued growth in fuel demand next year.

Brent crude dropped to $75.81 per barrel while U.S. West Texas Intermediate crude settled near $71.33. Both contracts ended Friday in the green after seven weeks of declines. Marking their lengthiest period of weekly decreases since 2018, reflecting persistent worries regarding an oversupply of crude in the market.