Safe-haven gold prices may get some support from the slight decline in the US dollar (USD) along with the risk of further escalation of geopolitical tensions in the Middle East. Traders may also avoid placing aggressive bets ahead of the release of the FOMC meeting minutes on Wednesday. In addition, the US Consumer Price Index (CPI) and the US Producer Price Index (PPI) to be released on Thursday and Friday should provide fresh momentum to Yellow Metal.
Daily Digest Market Movers: Gold price drifts lower amid expectations for less aggressive Fed policy easing
- The upbeat US jobs report for September released on Friday prompts traders to pare bets for a more aggressive policy easing by the Federal Reserve and undermines the Gold price.
- According to CME’s FedWatch tool, market participants are currently pricing in an 85% chance of a 25 basis points rate cut at the next FOMC monetary policy meeting in November.
- The yield on the benchmark 10-year US government bond moved past the 4% threshold for the first time in two months, while the US Dollar moved away from a seven-week high.
- Minneapolis Fed President Neel Kashkari noted on Monday that the overall balance of risks has now shifted away from higher inflation, towards maybe higher unemployment.
- Separately, St. Louis Fed President Alberto Musalem said that he supports additional interest rate cuts and that the economic performance will determine the path of monetary policy.
- Hezbollah fired rockets at Israel’s port city of Haifa and a military base near the central city of Tel Aviv, while Israel bombed a couple of buildings in the southern suburbs of Beirut.
- Investors remain concerned that Middle East tensions could turn into a wider conflict, which might act as a tailwind for the safe-haven yellow metal and help limit deeper losses.
- China’s state planner – the National Development and Reform Commission (NDRC) – said this Tuesday that the downward pressure on China’s economy is increasing.
- Traders now look to the release of the FOMC meeting minutes on Wednesday, which will be followed by the latest US inflation figures on Thursday and Friday, respectively.
Technical Outlook: Gold price bulls trying to defend short-term trading range support neear $2,618 area
The gold $2,618 zone, or the lower boundary of a short-term trading range, might continue to protect the immediate downside. A convincing break below might prompt some technical selling and drag the yellow metal below the $2,600 mark, towards the next relevant support near the $2,572 zone. The corrective decline could extend further towards the next relevant support near the $2,535 region en route to the $2,500 psychological mark.
Meanwhile, oscillators on the daily chart are holding in positive territory and favor bullish traders. That said, the $2,665 area might continue to act as an immediate barrier. This is followed by the $2,686 zone or the all-time high touched in September, and the $2,703 mark, which if cleared will be seen as a fresh trigger for bulls and set the stage for an extension of a well-established multi-month-old uptrend.
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