Solid Gold Futures – Global gold prices weakened again during early European trading on Wednesday (October 28), with XAU/USD remaining below US$4,050 per troy ounce. This decline snaps a two-session winning streak as investors await the Federal Reserve’s policy decision, scheduled for announcement later today.
The Fed is widely expected to keep interest rates unchanged at its October meeting. However, market attention will be fixed on the policy statement and comments from Fed Chair Kevin Warsh, as investors look for clues regarding the future path of interest rates—specifically the possibility of a hike in December.
The market currently prices in an over 80% probability that the Fed will raise borrowing costs again before the end of the year. Concerns over inflation, driven by high energy prices, further reinforce expectations for additional tightening, which in turn limits the appeal of gold—an asset that yields no return.
Beyond the FOMC decision, investors are also looking ahead to the release of preliminary U.S. third-quarter GDP data and the Personal Consumption Expenditures (PCE) price index on Thursday. Both datasets will serve as key indicators for assessing the strength of economic growth and inflationary pressures, helping to shape market expectations for the Fed’s subsequent policy moves.
Pressure on gold is further compounded by a strengthening U.S. dollar and rising geopolitical risks in the Middle East. Tensions between the U.S. and Iran, reports of Houthi attacks on facilities in Saudi Arabia, and stalled diplomatic efforts have pushed oil prices higher, sustaining demand for the U.S. dollar as a safe-haven asset.
Nevertheless, XAU/USD remains above the three-month low touched earlier this week. Yet, as long as expectations for a December rate hike remain high and the U.S. dollar stays strong, the scope for a recovery in gold prices is likely limited, and any rebound remains vulnerable to renewed selling pressure. (srh)