Gold Dips, But Bank of Canada Gives Major Cut Signal

Gold slipped before the weekend, giving back some of its earlier gains, but the pullback may not last long. The tone from central banks has turned noticeably softer, with the Bank of Canada’s (BoC) latest comments echoing a growing shift toward fear that could soon boost precious metals again. Governor Tiff Macklem said the bank is putting more emphasis on risk when it comes to the next rate decision. Markets quickly interpreted that as a clear hint that the BoC is leaning toward a cut. That matters outside Canada’s borders, because it reinforces the pattern of central banks signalling that the balance of risk is now tightening too far rather than doing too little.

Traders read Macklem’s words as the closest thing yet to a pre-announcement ahead of the October 29 meeting. Swaps pricing is showing roughly a two-thirds chance of a rate cut. It’s part of a global pivot that began when the Fed and ECB each started softening their language earlier this month. Central banks are finally acknowledging the lagged effects of policy tightening and the increasing downside risks to growth, a backdrop that typically benefits gold.

Even with Friday’s dip, gold remains supported by expectations that lower interest rates are on the horizon. Dovish policy change signals raise the possibility that money supply growth could take off again. That would immediately boost gold’s traditional hedge appeal. Lower yields, currency values plummeting, and uncertainty have usually been the fuel for the start of sustained rallies in precious metals.

Traders locking in some profits and a small rebound in bond yields could explain the weekend weakness. Despite that, the underlying narrative is the same. Global policymakers are becoming more sensitive to risk, markets are positioning for easing, and investors are once again questioning fiat purchasing power. Historically, that has been the point when gold’s pullbacks become opportunities rather than warnings.