Washington: Gold prices remained subdued on Tuesday as the precious metal failed to cross the $4,000-per-ounce threshold, weighed down by a stronger U.S. dollar and renewed doubts over the Federal Reserve’s pace of interest rate cuts. Despite significant gains earlier this year, investors appear to be taking a cautious stance as the dollar’s resilience and shifting expectations around monetary policy sap enthusiasm for bullion.
Spot gold slipped 0.4 percent to $3,984.49 per ounce in early global trading, while U.S. gold futures fell 0.5 percent to $3,994.40. The greenback hovered near a three-month high, tightening pressure on gold as a strong dollar typically makes the metal more expensive for holders of other currencies. Analysts note that this renewed dollar strength is acting as a major roadblock for gold, which has rallied by more than 50 percent since January but has cooled off sharply in recent weeks.
Tim Waterer, Chief Market Analyst at KCM Trade, said that the U.S. currency’s firmness and uncertainty surrounding future rate cuts have kept investors hesitant. “The stronger dollar is proving to be a thorn in gold’s side,” he observed, adding that traders are recalibrating expectations of another rate cut before the end of the year.
The Federal Reserve’s recent policy stance has added to market uncertainty. While the central bank cut rates for the second time this year, Fed Chair Jerome Powell stressed that another rate reduction was “not a foregone conclusion.” Prior to his remarks, markets had priced in over a 90 percent probability of a December rate cut, but that expectation has since slipped to around 65 percent.
Gold generally benefits from lower interest rates, as it reduces the opportunity cost of holding non-yielding assets. However, with the Fed adopting a wait-and-see approach, investors are re-evaluating short-term prospects for bullion. Market participants are also awaiting a series of key U.S. data releases this week, including employment and manufacturing indicators, which could influence the Fed’s next move and, consequently, gold’s direction.
The broader geopolitical and economic landscape has also shifted against gold’s favour. Easing tensions between the United States and China have reduced safe-haven demand, while stronger economic data in recent weeks has boosted confidence in riskier assets. Nevertheless, analysts caution that any resurgence in geopolitical uncertainty or signs of economic weakness could reignite gold’s appeal.
Despite its current retreat, gold remains one of the best-performing assets of 2025, up about 53 percent since the beginning of the year. However, it has dropped more than 8 percent from its record high of $4,347 per ounce reached on October 20.
India, one of the world’s largest consumers of gold, continues to witness steady domestic demand despite international price pressures. In local markets, jewellers in cities like Ahmedabad and Chennai report stable footfalls ahead of the festive season. However, the combination of a firm dollar and a weaker rupee has pushed up domestic prices, making gold jewellery purchases more expensive for Indian consumers.
For investors, the situation presents a mixed outlook. Those seeking long-term wealth preservation may view any pullback in prices as an opportunity, while short-term traders remain cautious amid the uncertain global cues. A potential reversal in the dollar’s strength or weaker U.S. data could provide much-needed relief for bullion buyers in the months ahead.
Analysts suggest that the next key triggers for gold prices will come from upcoming U.S. macroeconomic indicators and fresh comments from Fed policymakers. Should inflation soften or employment growth slow, it may revive expectations for an additional rate cut, potentially lifting gold back above the $4,000 mark.
Until then, the yellow metal appears set to trade within a narrow range, balancing between the bullish undertone of global uncertainty and the bearish weight of a strong dollar. For Indian investors and jewellery buyers, monitoring the interplay of global cues, currency movements, and domestic demand will be crucial in determining the right moment to enter the market.