Investor sentiment remained unchanged after the report of the minutes of the latest Federal Reserve (Fed) meeting that revealed internal disagreements over the country's monetary policy.
The minutes have shown that Fed Chairman Jerome Powell has faced opposition to a proposed rate cut of half a basis point (50bps) last September, where some policymakers proposed a more modest rate cut (25bps).
The results of the minutes of the FOMC meeting yesterday are seen to have depressed the price of gold. In addition, in the minutes report of the Federal Open Market Committee (FOMC), some Federal Reserve (Fed) officials have voiced concerns about aggressive rate cuts that may affect financial stability and trigger market uncertainty.
IMPACT OF CPI ON THE MARKET
The Consumer Price Index (CPI) for September is expected to rise just 0.1%, the smallest increase in three months. On a year-over-year basis, the CPI is expected to increase by 2.3%, continuing its decline for the sixth consecutive month and posting the lowest annual rate since early 2021.
Even so, Core CPI is expected to increase by 0.2% compared to the previous month and 3.2% compared to September 2023.
If the Core CPI data report shows a drastic decline than expected in monthly and annual inflation, it could revive hopes for a more aggressive rate cut (50bps) by the Fed in the coming months.
This scenario leaves gold with the potential to make a significant recovery if the Federal Reserve (Fed) signals a shift towards more aggressive monetary easing, with the US dollar likely to lose value against other major currencies.
CFTC DATA REPORT
The latest Commitment of Traders (CFTC) report, reported to the public last Friday, October 4, has shown a short-term bearish trend for gold since the beginning of the week.
However, from a short-term perspective, gold has the potential to reverse the price (Reversal). However, the gold market is seen to remain vulnerable to changes in Federal Reserve (Fed) policy.
Technical Analysis of Gold Price
Based on the daily chart, the $2,600 price level is a critical price level for gold buyers. If the level fails to be maintained, the drop in gold prices will be triggered at least up to the level of $2,579.
However, if the $2,600 price level is successfully maintained, gold should trade close above the $2,633 price level for gold to continue to remain in demand.
