Gold trading with a negative bias for the fifth day in a row, with smaller Fed rate cut bets.
Gold price (XAUUSD) attracted some sellers for the fifth day in a row on Tuesday, falling to almost a one-week low and drawing closer to the $2,630 trading range support during the first part of the European session. Friday’s robust US jobs report provided fresh evidence of a relatively resilient labor market, forcing investors to reduce their hopes on another big interest rate cut by the Federal Reserve (Fed). This, in turn, is viewed as a significant factor reducing demand for the non-yielding yellow metal.
However, a minor US Dollar (USD) decline, combined with the potential of further escalation of geopolitical tensions in the Middle East, may provide some support to the safe-haven Gold price.
Traders are looking for new direction from the FOMC minutes and US inflation data.
Traders may also refrain from making aggressive wagers ahead of the release of the FOMC meeting minutes on Wednesday. Aside from that, the US Consumer Price Index (CPI) and US Producer Price Index (PPI), which are coming on Thursday and Friday, respectively, might provide a boost to the XAUUSD.
Daily Market Movers: Gold price declines amid forecasts of less aggressive Fed policy is relaxing.
The optimistic US employment data for September, announced on Friday causes traders to reduce expectations on a more aggressive policy easing by the Federal Reserve, undermining the gold price.
According to CME’s FedWatch tool, market participants expect an 85% chance of a 25 basis point rate drop at the next FOMC monetary policy meeting in November.
The benchmark 10-year US government bond yield rose above 4% for the first time in two months, while the US dollar fell from a seven-week high.
Minneapolis Fed President Neel Kashkari stated on Monday that the overall balance of risks has shifted away from rising inflation and toward higher unemployment.
Separately, St. Louis Fed President Alberto Musalem stated that he supports more interest rate decreases and that
Economic performance will decide the direction of monetary policy.
Hezbollah fired missiles at Israel’s port city of Haifa and a military camp near Tel Aviv.
Hezbollah fired missiles at Israel’s port city of Haifa and a military camp near Tel Aviv, while Israel attacked a few buildings in Beirut’s southern suburbs.
Investors are apprehensive that Middle East tensions could escalate into a larger conflict, which might act as a tailwind for the safe-haven XAU/USD and prevent further losses.
China’s state planner, the National Development and Reform Commission (NDRC), stated on Tuesday that downward pressure on the Chinese economy is intensifying.
Traders are now anticipating the release of the FOMC meeting minutes on Wednesday, followed by the latest US inflation statistics on Thursday and Friday, respectively.
