Solid Gold Futures – Global gold prices edged lower in Thursday’s (Oct 29) trading session after the Federal Reserve kept interest rates unchanged and provided limited guidance on the future direction of its policy. XAU/USD hovered around US$4,045 per troy ounce, following a modest three-session winning streak.
The Federal Open Market Committee (FOMC) voted 10-2 to maintain its benchmark interest rate. Additionally, Fed official Kevin Warsh raised the possibility of reducing the number of scheduled interest-rate decision meetings from eight to six per year—a move that could further cloud the outlook for monetary policy.
While the Fed’s decision to hold rates steady was widely anticipated by the market, investors remain wary of a potential rate hike in December, particularly as high energy costs continue to fuel inflationary pressure. The prospect of a tighter monetary policy acts as a headwind for gold, an asset that does not yield interest.
Market attention has now shifted to the U.S. Personal Consumption Expenditures (PCE) price index for September, set for release on Thursday. As a key inflation gauge favored by the Fed, this data will offer crucial insight into the likelihood of a rate hike before the year ends.
Meanwhile, gold remains vulnerable to pressure from the stock market. A sell-off in artificial intelligence-related stocks last week prompted some investors to liquidate gold holdings to cover losses elsewhere, pushing the precious metal to its lowest level since July. For the month of October, gold has declined by approximately 2.5%, putting it on track for its second consecutive monthly loss.
In the short term, the trajectory of gold prices will largely depend on the PCE data and shifts in expectations regarding a December rate hike. Persistently high inflation could bolster the case for a rate increase—thereby weighing on gold—while weaker-than-expected data could drive down yields and the U.S. dollar, potentially paving the way for a price recovery. (srh)