Gold prices dropped by 1% on Friday, pressured by uncertainty surrounding further interest rate cuts by the US Federal Reserve. However, the precious metal remained on course for a third consecutive monthly gain.

At 1:49 p.m. ET (1749 GMT), spot gold had fallen 0.6% to $4,001.74 per ounce, with a 3.7% monthly gain still in sight. US gold futures for December delivery closed 0.5% lower at $3,996.50 per ounce.

The stronger dollar, which held near a three-month high, made gold more expensive for holders of other currencies. In a speech on Friday, Federal Reserve Bank of Cleveland President Beth Hammack expressed opposition to further interest rate cuts, suggesting the central bank should maintain some restrictions to combat inflation. “Hammack’s comments have added pressure to gold, as she becomes the third regional Fed President to publicly oppose additional rate cuts amid persistent inflation concerns,” said independent metals trader Tai Wong.

Despite the Fed’s interest rate cut on Wednesday, hawkish remarks from Chairman Jerome Powell led to a sharp decrease in market expectations for a December rate cut. According to the CME FedWatch tool, markets are now pricing in a 63% chance of a rate reduction in December, down from over 90% earlier in the week.

Gold tends to lose its appeal when interest rates rise, as it does not offer a yield. The metal has gained 53% this year, reaching an all-time high of $4,381.21 on October 20.

Morgan Stanley noted on Friday that it remains bullish on gold, forecasting further upside driven by interest rate cuts, continued inflows into ETFs, central bank purchases, and broader economic uncertainty. The bank expects gold to average $4,300 per ounce in the first half of 2026.

Meanwhile, US President Donald Trump announced Thursday that he would reduce tariffs on China from 57% to 47% in exchange for Beijing addressing the illicit fentanyl trade, resuming US soybean purchases, and ensuring the flow of rare earth exports.