Gold price (XAU/USD) is currently facing a lack of firm near-term direction due to a mixed fundamental backdrop. The diminishing odds for an aggressive Federal Reserve (Fed) easing have capped the upside for XAU/USD. Despite this, geopolitical risks and a modest downtick in the US Dollar are expected to limit losses for the commodity. Traders are keeping an eye on various economic indicators and events, such as the release of the September FOMC meeting minutes, the US Consumer Price Index (CPI), and the US Producer Price Index (PPI), which are likely to influence the USD and provide impetus to XAU/USD.
Following the release of the upbeat US jobs report for September, traders have scaled back bets for a more aggressive policy easing by the Federal Reserve, which has undermined the Gold price. Market participants are currently pricing in an 85% chance of a 25 basis points rate cut at the next FOMC monetary policy meeting in November. Geopolitical tensions in the Middle East, such as Hezbollah firing rockets at Israel and Israel bombing buildings in Lebanon, have added to the uncertainty in the market and could support the safe-haven appeal of XAU/USD. The National Development and Reform Commission (NDRC) in China has also highlighted increasing downward pressure on the country’s economy, further adding to market concerns.
From a technical standpoint, the $2,632-2,630 area is acting as the lower boundary of a short-term trading range and is likely to provide immediate support for XAU/USD. A break below this level could lead to further downside towards the $2,600 mark and the next support zone near $2,560. However, positive momentum is still favored by oscillators on the daily chart, with immediate resistance levels lying at $2,670-$2,672. Clearing these levels could pave the way for a retest of the September high around $2,685-2,686 and potentially push XAU/USD towards the $2,700 mark.
Overall, the current mixed fundamental backdrop and geopolitical uncertainties are keeping Gold price directionless in the near term. Traders are closely monitoring economic indicators and geopolitical developments for cues on the future movement of XAU/USD. The release of key data such as the FOMC meeting minutes and US inflation figures later in the week will provide further insights into the market sentiment and may influence the direction of Gold price in the coming days. While downside risks remain due to a stronger US Dollar and reduced expectations of a Fed rate cut, geopolitical tensions and technical indicators could support the safe-haven appeal of Gold and limit any deeper losses in the short term.
