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Gold prices in limbo, Fed president says fight against inflation could take longer

Gold prices fell about 0.5% to just below $2,650 an ounce after Thomas Barkin, president of the Richmond Federal Reserve, said there was “still a lot of work to do on inflation” during an economic conference on Wednesday.

Last week, traders expected a 50 basis point cut during the upcoming FOMC meeting on November 7th; However, this sentiment has shifted to expect a smaller reduction of a quarter point.

Gold showed weakness early Thursday, starting with the opening of the US market. (Source: TradingView) (Source: PR)

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The Fed reportedly cut interest rates at its meeting last month after observing a weakening labor market and improving inflation data.

More U.S. labor market data, including nonfarm payrolls, unemployment rate and hourly wages, will be released before markets open on Friday.

Silver prices fell more than 1% on Thursday to settle in the $31.45 range.

Silver was also trading lower on Thursday morning. (Source: TradingView) (Source: PR)

Zain Vawda, market analyst at Marketpulse by OANDA, told Reuters: “Although there was some safe-haven buying following the announcement of the Iranian attack, the possibility that rate cuts are not as aggressive as expected may have limited gains and this continue to do so.” So.”

However, some investors still expect a significant increase in precious metals prices amid numerous tailwinds, including large central bank purchases related to de-dollarization efforts and economic relaxation cycles.

“Earlier, we suggested that 15% of investments should go into gold,” said Bhargav Vaidya, a gold analyst. “But now that gold prices have started giving 18-20% annual returns, the investment should go up to 25%.”

But some analysts believe the U.S. dollar's recent short-term strength has cooled the potential gains of a significant escalation in the Middle East amid Israel's fight against Hamas and Hezbollah.

The US Dollar Index ($DXY) rose for the fourth straight day on Thursday.

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