Gold Prices
Gold (XAU/USD) continued trading with a positive bias on Wednesday, marking its second consecutive day of gains. However, the precious metal remains trapped in a familiar range as traders await clearer signals about the Federal Reserve’s (Fed) rate-cut trajectory.
Fed Outlook and Economic Data in Focus
- Rate-Cut Uncertainty: Markets are pricing in a 70% chance of a 25-basis-point rate cut by the Fed in December, according to the CME FedWatch Tool.
- Fed Commentary:
- Fed Governor Adrianna Kugler reiterated a meeting-by-meeting approach to monetary policy.
- San Francisco Fed President Mary Daly expressed optimism about the US economy but did not rule out a December rate cut.
- Chicago Fed President Austan Goolsbee suggested rates might ease significantly next year if inflation nears the target.
- Upcoming Data: Powell’s speech and Friday’s Nonfarm Payrolls (NFP) report will be pivotal in shaping short-term gold price direction.
Key Headwinds and Support for Gold
- US Dollar and Bond Yields: Modest gains in US Treasury yields, supported by concerns over inflation, underpin the US Dollar, limiting gold’s upside potential.
- Geopolitical Tensions: Persistent fears of trade wars and heightened tensions in the Middle East provide a safety net for gold.
- Global Economic Signals: Weak data from China, with the Caixin Services PMI falling to 51.5, adds to economic concerns, further supporting safe-haven demand.
Market Sentiment
The mixed backdrop of Fed expectations, geopolitical risks, and subdued USD demand keeps gold prices from gaining significant traction. Investors remain cautious, opting to wait for clearer direction from Powell’s speech and key economic indicators.
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