Gold price forecast continued their downward trend, marking the sixth consecutive day of losses. This decline followed the Federal Reserve’s (Fed) release of its September Meeting Minutes. According to the minutes, a “substantial majority” of Federal Open Market Committee (FOMC) members supported a 50-basis-point (bps) rate cut. Despite this, the XAU/USD pair remains stable around familiar levels near $2,610, down by 0.37%.
Gold Price Forecast: Insights from the FOMC Meeting Minutes
The FOMC Meeting Minutes revealed that while most officials supported a 50 bps cut, some preferred a smaller 25 bps reduction. However, all participants agreed on the necessity of reducing interest rates. The Fed’s dual mandate remained a central concern, with most officials noting that inflation risks had decreased, but labor market risks had increased.
As market participants processed this data, the CME FedWatch Tool reflected shifting expectations. The probability of a 25 bps rate cut dropped from 85.2% to 75.9%. Conversely, the chance of the Fed maintaining current rates rose from 14.8% to 24.1%.
Impact on US Treasury Yields and the Dollar
US Treasury yields surged, with the 10-year note climbing to 4.062%, an increase of 5.5 bps. This rise bolstered the US dollar, as reflected in the US Dollar Index (DXY), which climbed by 0.42% to 102.90, the highest level seen since mid-August 2024.
Focus Shifts to US CPI Data
All eyes are now on the upcoming release of the US Consumer Price Index (CPI) data, scheduled for Thursday. Analysts expect inflation to trend lower, but if the data comes in higher than expected, it could lead to a halt in the Fed’s current rate-cutting cycle.
The US economic calendar for the week includes inflation reports, job market updates, and commentary from key Fed officials. This data will be critical in shaping the Fed’s future policy decisions.
Key Market Movers Ahead of US CPI Data
- US CPI Forecast: Expected to decrease from 2.5% to 2.3% year-on-year (YoY).
- Monthly CPI: Anticipated to fall from 0.2% to 0.1%.
- Core CPI: Expected to remain steady at 3.2% YoY but dip from 0.3% to 0.2% month-on-month (MoM).
Additionally, the Initial Jobless Claims report for the week ending October 5 is projected to show that 230,000 people filed for unemployment, up from the previous week’s 225,000.
Fed Officials’ Remarks Following the Jobs Report
After the release of the recent Non-Farm Payrolls (NFP) report, Federal Reserve officials took a more cautious stance. Vice-Chair Philip Jefferson emphasized a data-driven approach, while Boston Fed President Susan Collins indicated that further rate cuts are likely, contingent on economic data.
Wall Street banks, such as Citi, JPMorgan, and Bank of America, have revised their expectations for the November Fed meeting, reducing their forecast from a 50 bps to a 25 bps rate cut.
Global Influence – China’s Impact on Gold
Meanwhile, the People’s Bank of China (PBoC) has paused its gold purchases for the fifth consecutive month. China’s gold reserves remained at 72.8 million troy ounces at the end of last month, signaling a slowdown in bullion demand from the world’s largest gold consumer.
Gold Price Technical Analysis
Gold price forecast have slipped below $2,630, reaching a daily low of $2,605 as traders digest the FOMC’s September Meeting Minutes. The current momentum is bearish, though the Relative Strength Index (RSI) shows mixed signals, sitting in bullish territory.
- Support Levels: A breach of $2,600 could lead to further declines, with the next key levels being the psychological $2,550 mark and the 50-day Simple Moving Average (SMA) at $2,537.
- Resistance Levels: If gold rallies above $2,650, it may challenge the $2,670 level, with the Year-to-Date (YTD) high of $2,685 being the next major resistance.
As market participants eagerly await the upcoming US CPI impact on gold data, it’s essential to keep a close watch on gold price movements, interest rate decisions, and the global economic landscape. For more insights, explore daily gold market updates on our Daily Gold Signal website, or for detailed forecasts, visit Daily Gold Updates.
