October 8, 2024
New Delhi, India
Gold Prices
Gold (XAU/USD) continues to struggle for momentum, trading within a familiar range as market forces remain mixed. The upbeat US jobs report last Friday reinforced a resilient labor market, prompting investors to further reduce expectations of a major interest rate cut by the Federal Reserve (Fed) in November. This has kept the US Dollar steady near a seven-week high, which, in turn, acts as a headwind for the non-yielding yellow metal.
US Dollar Strength Limits Gold’s Upside
The stronger US jobs data has led traders to pare back expectations for aggressive Fed easing. According to the CME’s FedWatch tool, market participants now see an 85% chance of a 25 basis points rate cut at the upcoming FOMC meeting in November, further limiting upside for Gold. With the Fed less likely to cut rates aggressively, the US Dollar remains firm, capping potential gains for XAU/USD.
Geopolitical Tensions Support Safe-Haven Demand
Despite the pressure from a strong Dollar, geopolitical tensions in the Middle East offer a degree of support for Gold, a traditional safe-haven asset. As tensions escalate, particularly after Hezbollah’s rocket attacks on Israel and retaliatory strikes on Beirut, concerns are growing that the conflict could widen, helping limit deeper losses for Gold.
Key Events This Week: FOMC Minutes and US Inflation Data
Investors are cautious ahead of key US economic data releases. The September FOMC meeting minutes are due on Wednesday, followed by the release of the US Consumer Price Index (CPI) on Thursday and the Producer Price Index (PPI) on Friday. These events are expected to offer new insights into the Fed’s monetary policy path and could provide meaningful impetus to XAU/USD.
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