Gold price edge down as investors look at US CPI data

Gold fell as the Fed minutes revealed that a “large majority” supported a 50 basis point cut, while some favored a 25 basis point cut.
The CME FedWatch Tool shows a lower probability of a cut of 25 basis points to 75.9%, with expectations for a pause rising.
The US 10-year Treasury yield rises to 4.062%, supporting the US dollar.
Traders are waiting for Thursday’s CPI data, which will provide further guidance on inflation and Fed policy.

Gold deepened its losses for the sixth day in a row after the Federal Reserve (Fed) released minutes from its September meeting. The minutes showed that a “large majority” of the Federal Open Market Committee (FOMC) supported a 50 basis point (bp) rate cut. Despite this, the XAU/USD rate remains at familiar levels near $2,610, down over 0.37%.

The minutes of the FOMC meeting show that some officials would prefer a 25-basis-point cut in interest rates, although all participants were in favor of lowering interest rates. As for the Fed’s dual mission in both cases, almost all officials noted that inflation risks tilted to the downside while labor market risks tilted to the upside.

Following this data, the CME FedWatch Tool shows that the odds of a 25bp rate cut have dropped from 85.2% a day ago to 75.9%. This means that some market participants supported the Fed leaving interest rates unchanged, at 24.1%, compared to 14.8% on Tuesday.

U.S. Treasury yields continued to rise, with the U.S. 10-year Treasury bond yielding 4.062%, an raise of five and a half basis points. This strengthened the dollar, which rose 0.42% to 102.90, the highest level since mid-August 2024, according to the US Dollar Index (DXY).

Now investors’ attention is focused on Thursday’s publication of the American Consumer Price Index (CPI). Estimates suggest that inflation will continue to trend downwards. Nevertheless, if inflation is higher than estimates, it will open the door to a break in the Fed’s monetary easing cycle.

This week’s U.S. economic schedule will include U.S. inflation, U.S. employment data and Fed speeches.

Daily summary of market changes: Gold prices under pressure from FOMC minutes ahead of US CPI

The CPI in the US is expected to fall from 2.5% to 2.3% y/y. Monthly CPI is forecast to be 0.1%, up from 0.2%.
Core CPI is expected to remain unchanged compared to the August level of 3.2% y/y. It is estimated that in September the value will drop from 0.3% to 0.2% m/m.
Other data shows the number of unemployed workers for the week ending October 5. Forecasts suggest that 230,000 people applied for unemployment benefits. up-to-date people, more than previously estimated at 225 thousand.
After Friday’s NFP report, Fed representatives are more cautious. Vice-President Philip Jefferson said his approach was “meeting by meeting” and driven by data. Boston Fed President Susan Collins expects further interest rate cuts, also based on incoming data.
After the latest US jobs report, fears of a recession have subsided. That’s why most Wall Street banks like Citi, JPMorgan and Bank of America revised their November Fed call from a 50 to 25 basis point rate cut.
Meanwhile, the People’s Bank of China (PBoC) suspended bullion purchases for the fifth month. China’s reserves remained unchanged and stood at 72.8 million troy ounces at the end of last month.

XAU/USD Technical Analysis: Gold price falls as sellers see support below $2,650

Gold prices extended losses below $2,630 and fell to intraday lows of $2,605 as investors digested minutes from the September FOMC meeting.

Short-term momentum is bearish even though the Relative Strength Index (RSI) shows mixed readings and remains in bullish territory.

XAU/USD fell below $2,620. Breaking above the $2,600 level will expose the psychological mark of $2,550 ahead of the 50-day plain moving average (SMA) at $2,537. Once these levels are exceeded, the next level will be $2,500.

Conversely, if gold aims higher and reclaims $2,650, it will pave the way to break $2,670 above the year-to-date high of $2,685.