Gold News: Sixth Day of Losses as Traders Await Fed Minutes and CPI Report

Gold Extends Losses Ahead of US Inflation Data and Fed Minutes

Gold prices fell for a sixth consecutive session on Wednesday, trading near two-week lows as market sentiment remained cautious ahead of key U.S. economic data. Spot gold tested a minor support level at $2,616.25, and continued downside pressure could push prices toward the next pivot at $2,578.25.

Our analysis suggests a key downside target lies at the support cluster around $2,546.86, supported by the 50% daily moving average at $2,537.97.

At 12:06 GMT, XAU/USD is trading $2621.66, down $0.305 or -0.01%.

Fed Expectations and Inflation Concerns Weigh on Gold

The decline in gold prices reflects shifting expectations for U.S. Federal Reserve monetary policy, with traders scaling back bets on aggressive rate cuts. Recent strong U.S. payroll data suggested resilience in the labor market, raising questions about the likelihood of a “soft landing” for the U.S. economy.

The Fed’s September meeting minutes, set for release later today, may provide more insight into policymakers’ thinking, while the upcoming Consumer Price Index (CPI) and Producer Price Index (PPI) reports on Thursday and Friday will be closely watched for signs of persistent inflation.

Zain Vawda, a market analyst at OANDA, noted, “The precious metals sector seems somewhat disappointed after China’s recent economic meeting reignited concerns about growth in Q4, coupled with less aggressive rate cut expectations in the U.S.” Gold’s status as a non-yielding asset typically benefits in a lower interest rate environment, but current market uncertainty is limiting upside potential.

Treasury Yields and Dollar Strength Pressure Gold

U.S. Treasury yields eased slightly on Wednesday, with the 10-year note dipping to 4.02%. However, recent higher rates have contributed to the pressure on gold, as higher yields increase the opportunity cost of holding non-yielding assets like bullion. The U.S. dollar also edged higher, reaching a two-month high against a basket of major currencies, further weighing on gold prices. The strong dollar has made gold more expensive for holders of other currencies, thereby curbing demand.

Rising geopolitical tensions in the Middle East and concerns over inflationary pressures from rising oil prices have complicated the outlook for rate cuts, contributing to the recent rally in Treasury yields. Investors are adjusting their expectations for the Fed’s next move, with markets pricing in an 85% chance of a 25-basis point rate cut in November, according to CME’s FedWatch tool.

Market Forecast: Limited Downside Potential for Gold

Gold’s short-term outlook remains pressured by the stronger dollar and higher Treasury yields. However, if the upcoming U.S. inflation data shows signs of moderating price pressures, the yellow metal could find support around the $2,546.86 level.

Conversely, a significant rise in inflation could trigger further selling. Given current uncertainties, gold prices are likely to remain range-bound, with limited downside below $2,537.97 in the near term.