Gold Price Analysis: Gold Falls for Fifth Session – 09 October 2024

-- The gold price has retreated to the support level of $2605 per ounce, its lowest in two weeks, declining for the fifth consecutive session.
-- Recently, the better-than-expected US jobs report has weakened expectations of a more aggressive interest rate cut by the US Federal Reserve.
-- Currently, financial markets are placing an 86% probability that the Fed will implement a modest 25-basis point interest rate cut in November.

Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion assets. Now, traders are looking to US consumer price index and producer price index data, scheduled to be released this week, to assess the progress of price pressures, along with the minutes of the Federal Open Market Committee (FOMC) meeting and statements from several Fed officials for further guidance.

Meanwhile, gold’s appeal as a safe haven asset supports its bullish bias, driven by escalating violence in the Middle East. Elsewhere, China’s central bank refrained from buying gold for its reserves for the fifth straight month in September.

According to gold trading platforms, Spot gold has surged about 30% this year, hitting consecutive record highs. Its meteoric rise not only makes it a top-performing commodity, but it also means the metal has outperformed U.S. stocks and bonds. Recently, the rally has been driven by its appeal as a safe-haven asset in times of geopolitical and economic uncertainty and its role as a diversification tool to protect wealth. It topped $2,600 an ounce last month, supported by the Federal Reserve’s shift to lower interest rates. Also, non-yielding gold tends to rise in a low-interest-rate environment.

As for factors affecting the gold market, the US dollar is stabilizing amid expectations of interest rate cuts. The US Dollar Index (DXY) settled around 102.4 on Tuesday, trading near its highest levels since mid-August as investors readjust their expectations for interest rate cuts by the Federal Reserve following the stronger-than-expected jobs report in September. Financial markets now see an 87% probability that the Fed will choose to cut interest rates by 25 basis points in November, with any chance of another half-percentage point cut ruled out, according to CME's FedWatch tool. Also, the dollar is tracking the strength of US Treasury yields, with the benchmark 10-year US Treasury yield rising above 4% for the first time since early August. Concurrently, investors are looking to the latest minutes of the Fed meeting on Wednesday and the consumer price index report on Thursday to further guide interest rate expectations. Elsewhere, rising tensions in the Middle East have continued to boost demand for the dollar as a safe haven.

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Gold Price Analysis and Forecast Today:

According to today's gold analysts, and despite recent losses, the overall trend of gold prices remains bullish. On this timeframe, the primary uptrend will not be broken without moving towards the support levels of $2575 and $2540 per ounce. Technically, remaining above the resistance of $2600 per ounce will continue to support the bulls' control over the trend. Furthermore, considering that the reaction to the announcement of the content of the latest meeting of the US Federal Reserve and inflation figures in the country will have an impact on the performance of gold prices in the remaining sessions of this week.

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Original Source DailyForex.com provides daily fundamental and technical analysis and signals for those looking to trade based on trends in the currency markets.