Gold prices continued to pull back in Asian trading on Tuesday as shifting expectations over a December interest rate cut by the Federal Reserve pushed the U.S. dollar higher, weighing on non-yielding assets like gold.

The yellow metal had already been on a downward trajectory, and the latest dip comes ahead of a long-delayed U.S. nonfarm payrolls (NFP) report for September, now expected later this week. The government shutdown has delayed key data releases, adding uncertainty to market forecasts.

Spot and Futures Under Pressure

• Spot gold fell 0.7% to $4,019.19 per ounce

• December gold futures slid 1.4% to $4,018.89/oz by 00:38 ET (05:38 GMT)

The drop reflects a broader sentiment shift, with investors dialing back expectations for a December rate cut. According to the CME FedWatch Tool, markets currently price in a 42.4% chance of a 25 basis point cut, versus a 57.6% chance that rates stay unchanged.

Rate Cut Expectations Fading

Gold’s recent slump has been closely tied to diminishing confidence in near-term rate cuts. Delays in key economic data due to the shutdown have left the Fed with fewer insights heading into its December 10–11 meeting.

A stronger dollar and uncertainty over monetary policy have boosted demand for U.S. Treasuries, which offer higher relative returns than gold in a high-rate environment. Mixed signals from Fed officials have contributed to the market uncertainty, with no clear consensus emerging on the path of rates.

All Eyes on Nonfarm Payrolls

The September nonfarm payrolls report, due Thursday, is set to be the last major labor market indicator before the Fed’s December meeting — and could prove a pivotal moment for market expectations.

For now, gold remains under pressure as “higher for longer” U.S. interest rates outweigh safe haven demand, keeping traders cautious until there’s more clarity on the economic outlook.