Gold Prices Fall As Markets Shift Focus To US Dollar And Fed, Geopolitical Tensions Easing
Gold prices saw a decline as market expectations of a significant interest rate cut by the Federal Reserve (Fed) in November faded.
Investors are now turning to the US dollar, which is putting downward pressure on the precious metal. Market players currently see an 85% chance that the Fed will cut rates by 25 basis points at its November meeting, while the chance of a 50 basis point reduction by the end of the year is shrinking.
Geopolitical factors, which had previously supported gold as a safe-haven investment asset, are also easing. Reports suggest that Iran-backed Hezbollah may be open to a ceasefire, potentially reducing regional tensions in the Middle East.
This decline in geopolitical risk added to the pressure on gold demand, thus contributing to the recent decline in prices.
A combination of a strengthening US dollar, reduced expectations of aggressive rate cuts by the Fed, and softening geopolitical risks have pushed gold prices lower.
The gold market today should be focused on the minutes of the FOMC meeting that will be reported early in the morning. The minutes will be evaluated by market players on the projection of interest rate cuts by the Federal Reserve (Fed), besides the minutes of the meeting will also clarify the future situation of the labor market in the country.
Technical Analysis of Gold Price
From a technical point of view, (XAU/USD) short-term outlook shows further downside potential. On the 2-hour chart, the $2,622 price level acts as a critical price marker. The main resistance of the gold market this week is seen at the price level of $2,642 & $2,652.
Gold is seen to still be under pressure if the main resistance level is not successfully broken.
Any sudden pressure on gold is seen to be able to push the price of gold up to the level of $2,578.
