Gold price outlook (XAU/USD) has been showing a negative trend for the fourth consecutive day, although the decline lacks significant follow-through. Currently, gold remains stuck within a familiar range from the past week, impacted by a mix of fundamental factors. The recent release of strong US employment data has reduced hopes of an aggressive rate cut by the Federal Reserve, keeping the US Dollar near its seven-week high and putting additional pressure on gold prices.
Another factor weighing on gold is the robust performance of global equity markets. However, any notable downward correction in the price of gold remains limited, mainly due to the ongoing geopolitical tensions in the Middle East, which continue to support the demand for this safe-haven asset. Investors may also be waiting for key updates, such as the FOMC meeting minutes scheduled for Wednesday and the US inflation data due on Thursday.
Key Market Drivers Impacting Gold Price
Friday’s stronger-than-expected US employment figures dampened expectations of an aggressive Federal Reserve rate cut. The Labor Department revealed that the US economy added 254,000 jobs in September, surpassing estimates and pushing the unemployment rate down to 4.1%, from 4.2%. Additionally, July and August saw 72,000 more jobs than initially reported, suggesting a still-strong labor market.
According to the CME Group’s FedWatch Tool, there is now a 95% likelihood that the Federal Reserve will cut rates by 25 basis points at the upcoming November meeting. Despite this, the strong labor market and limited policy shifts by the Fed keep the US Dollar strong, which suppresses gold prices.
Global Equity Markets and Geopolitical Risks
Optimism in global equity markets, spurred by positive US data and China’s economic stimulus measures, also hurts gold’s appeal as a safe-haven. However, geopolitical tensions in the Middle East, particularly the escalating conflict between Israel and Hezbollah, continue to support the price of gold. Israel’s airstrikes on Gaza and Hezbollah’s attacks on Haifa increase the likelihood of a broader conflict, which could benefit gold prices in the coming weeks. This persistent geopolitical risk keeps gold’s safe-haven status intact.
China’s Gold Reserves Remain Unchanged
Official data from China released on Monday revealed that its gold reserves held steady at 72.8 million fine troy ounces in September, marking the fifth consecutive month of unchanged reserves. Despite this, China’s gold policy continues to play a significant role in influencing global gold prices.
Technical Analysis of Gold Price Movements
From a technical standpoint, gold remains in a range-bound pattern, which could still be viewed as a bullish consolidation after its recent sharp rise to near-record levels. Key technical indicators suggest that the path of least resistance is upward. However, buyers may want to see a solid move above the $2,670-$2,672 range before making bullish bets. If gold surpasses the $2,685-$2,700 resistance levels, it could extend its multi-month uptrend and aim for new highs.
On the downside, the $2,630 area provides immediate support. A decisive break below this level could trigger selling pressure and push prices below $2,600, with further downside potential toward $2,560 or even $2,530.
What to Expect This Week
Traders will likely be paying close attention to the upcoming FOMC meeting minutes and US consumer inflation figures later this week. These events will offer more clarity on the Federal Reserve’s monetary policy stance, which could either provide support for or further suppress gold prices. Additionally, any escalation in Middle Eastern tensions could sway market sentiment, making gold an appealing safe-haven asset once again.
Conclusion
Gold price outlook remain trapped in a familiar range, under pressure from a strong US Dollar and positive equity market sentiment. However, persistent geopolitical tensions and upcoming economic data could change the outlook. Investors should keep an eye on these factors in the coming days. For more updates on daily gold price movements, visit Daily Gold Signal, or for further in-depth analysis, check out Daily Gold Update.
