As market expectations for a significant rate cut by the Federal Reserve in November wane, investors have shifted towards the dollar, applying downward pressure on gold.

The CME Group's FedWatch Tool indicates an 85% probability of a 25-basis-point rate cut in November, with a potential for a 50-basis-point reduction by year-end. However, mixed signals from Federal Reserve officials have kept investors cautious.

New York Fed President John Williams hinted that a gradual lowering of rates would be appropriate, while Fed Governor Adriana Kugler emphasized that policy decisions remain data-dependent.

This uncertainty has helped sustain the U.S. dollar's strength, adding further pressure on gold prices.

Adding to the downward pressure on gold, the 10-year U.S. Treasury yield remains above 4%, signalling investor confidence in the broader economy. Boston Fed President Susan Collins remarked that while inflation is cooling, economic and labor markets are still robust.

Fed Vice Chair Philip Jefferson noted solid economic growth, easing inflation, and a cooling labor market.

Strong economic indicators are dampening demand for safe-haven assets like gold, as traders reassess the likelihood of aggressive rate cuts.