Investors wait Fed President speech and its impact on gold

Gold prices remained flat on Wednesday, hovering around $1,980.89 an ounce as investors remained on the sidelines ahead of the Fed’s highly anticipated policy decision. All eyes are now on Federal Reserve Chairman Jerome Powell’s upcoming speech, as market participants hope for more clues about the central bank’s future interest rate trajectory.. Spot gold showed marginal change, settling at $1,980.89 an ounce. Bullion prices fell slightly after briefly surpassing the $2,000 high last week. The rally was supported by strong safe-haven flows amid escalating tensions in the Middle East, leading to the biggest monthly gain since March recorded in October.. Ole Hansen, Head of Commodity Strategy at Saxo Bank, commented on gold’s recent rally, saying: “This is just a long-awaited consolidation after the strong rally observed in the last three weeks. Prices are likely to fall to at least $1952 as part of this natural market correction. Market sentiment now anchors strongly on the outcome of the Fed’s two-day monetary policy meeting, followed by Powell’s speech. Although no rate adjustments are expected, investors are eagerly awaiting the Fed’s assessment of the US economy and any indications on future monetary policy decisions.. Praveen Singh, of BNP Paribas’ Sharikhan Narikhan, stressed the focus on the Fed’s forward-looking statements, saying: “The main concern remains the Fed’s assessment of the US economy and any hints it may provide regarding its future monetary policy trajectory. Investors are looking forward to learning about the central bank’s outlook, which will undoubtedly affect market dynamics in the coming weeks..

Gold demand slows in third quarter due to central bank purchases

Global gold demand, excluding over-the-counter trading, fell six percent in the third quarter compared to the same period in 2022, according to the latest World Gold Council data.. The decline was attributed to the central bank’s slower purchases from last year’s record levels and jewellers consuming less gold. Gold demand in the third quarter reached 1,147.5 metric tons, down from 1219.2 recorded in the third quarter of last year. However, it is higher than the second quarter of 2023 of 993.7 and eight percent higher than the five-year average.. The World Gold Council expects full-year formal sector purchases to be similar to 2022 levels, when gold demand rose to an 11-year high, driven by record central bank purchases.. Louise Street, senior market analyst at the World Gold Council, said: “With geopolitical tensions rising and strong purchases by central banks expected to continue, demand for gold could rise abruptly.” Overall, including over-the-counter trading, global gold demand rose six percent to 1,267.1 metric tons in the third quarter. The central bank’s demand for gold in the third quarter was 337.1 tonnes, down from a record 458.8 tonnes a year ago. However, formal sector gold purchases for the first nine months of 2023 amounted to 800 tonnes, surpassing any January-September period in World Gold Council data since 2000.. Buying gold bars and coins fell 14% in the third quarter as demand in Europe fell. Outflows from gold-backed exchange-traded funds continued as investors felt interest rates would remain high.. Overall, including over-the-counter trading, global gold demand rose six percent to 1,267.1 metric tons in the third quarter.

Gold prices fall due to prevailing uncertainty and expectations of the Federal Reserve meeting

Gold prices also fell due to uncertainty surrounding the Federal Reserve meeting and a major Treasury announcement. As of November 1, spot gold fell to $1,979 an ounce. Gold was at $2,009.29 an ounce on Friday, surpassing the critical psychological level of $2,000 for the first time since mid-May. Meanwhile, December gold futures fell 0.28% to $1,988.50 an ounce.. Markets are now focused on the outcome of the Fed meeting later today. The central bank is widely expected to maintain its tough stance on interest rates, given recent signs of rising inflation, a strong labor market and overall economic flexibility. This is negative for gold, as higher interest rates increase the opportunity cost of holding bullion.. In light of the recent geopolitical uncertainty, there is a possibility of a near-term price decline to the $2,000 level, noted Christopher Wong, OCBC CEO and currency strategist.. However, gold could also fall further to a trading range between $1,951 and $1,964 an ounce after repeatedly failing to surpass the $2,010 resistance level.. “But looking beyond geopolitics, we are likely to see an extended pause for the Fed – and the final shift in yields should be supportive of gold prices,” Wong said.”. Apart from gold, among industrial metals, copper prices fell further on Wednesday after more weak economic data from China. Copper futures fell 0.32 percent to $3.6375 a pound..

Gold prices fall as investors’ attention shifts

The consolidation of gold prices comes after last month’s rally due to growing tensions in the Middle East and investors are now turning their attention to potential changes in interest rates, manufacturing activity in the United States, construction spending, and job opportunities data amid fears of an impending recession. They are particularly keen on Fed Chairman Jerome Powell’s insights regarding possible rate adjustments. A survey of the Special Purchasing Managers’ Index (PMI) revealed an unexpected contraction in China’s manufacturing sector in October, reflecting a decline in a government survey released the previous day. This points to additional economic challenges for the world’s largest copper importer.. China’s manufacturing sector, a crucial driver of copper demand, faces new challenges due to falling external demand as the economies of its major trading partners deteriorate.. Spot silver and platinum prices also fell on Wednesday, with silver down 1.5 percent to $22.56 an ounce and platinum down 0.9 percent to $925.18. In contrast, palladium remained flat at $1,116.19. The National Treasury confirmed that there is no immediate plan to audit the Gold and Foreign Exchange Contingency Reserve (GFECRA) account, which some economists said should be relied upon to help narrow the gap between revenue and expenditure. . Prior to the medium-term budget policy statement, the Deputy Governor of the South African Reserve Bank noted that GFECRA gains have not materialized and are subject to rapid shifts depending on exchange rate movements..

Gold Price Analysis and Expectations of a Decline as Technical Indicators Decline

The price of gold is trending lower during the European session, trading at $1977 an ounce. Moving averages point to trading lows, MACD indicator points to weak selling power

Latest Articles