Global gold prices remained under pressure during Thursday’s European trading session (October 29), with XAU/USD hovering around US$4,030 per troy ounce—near its daily low. A resurgence in the US dollar, following a post-FOMC correction, has emerged as a primary factor weighing on the precious metal.
The Federal Reserve maintained interest rates in the 3.75%–4.00% range, with a 10-2 vote in favor of the decision. However, two Fed officials, Lisa Cook and Beth Hammack, advocated for a 25-basis-point hike. Fed Chair Kevin Warsh also emphasized that the central bank remains vigilant regarding inflationary pressures and geopolitical risks, leaving the door open for further tightening.
The market currently assigns an approximately 80% probability that the Fed will raise interest rates at its December meeting. This expectation has bolstered demand for the US dollar, putting pressure on non-yielding assets like gold—a trend exacerbated by concerns that rising energy costs could keep inflation elevated.
Geopolitical tensions in the Middle East have further supported the dollar, which is viewed as a safe-haven asset. Markets are closely monitoring the possibility of US military operations against Iran following the November 3 midterm elections, even as diplomatic efforts via regional mediators continue. Meanwhile, the ongoing conflict between the Houthi group and the Saudi-backed Yemeni government continues to fuel concerns regarding energy supplies.
In the short term, downward pressure on gold is likely to persist as long as the US dollar and expectations for interest rate hikes remain strong. Nevertheless, investors are expected to refrain from taking aggressive positions ahead of the release of US third-quarter GDP data and the Personal Consumption Expenditures (PCE) price index—both of which will provide critical insights into the future direction of Fed policy and the subsequent movement of XAU/USD. (srh)