Gold prices fell in early Tuesday trading before rebounding from a one-week low, holding just above the key $4,000 support level. The precious metal continues to face headwinds stemming from diminishing expectations that the Federal Reserve will cut rates in December. With the reopening of the US government, economic data releases will resume — including the delayed September Non-Farm Payrolls — leaving investors more uncertain and prompting them to price in lower odds of another Fed rate cut before year-end. This dynamic has been reinforced by a series of cautious public statements from senior FOMC members, which have indicated some hesitancy towards reducing borrowing costs. At the same time, gold’s safe-haven status continues to underpin demand as risk aversion picks up across financial markets, driving broad-based losses in equities amid growing fears of an economic downturn. Against this backdrop — with gold caught between opposing forces — investors are now looking ahead to the release of the latest FOMC minutes on Wednesday, hoping for greater clarity on the Fed’s rate path. Any signals on future policy will likely influence the performance of the US dollar, and therefore that of the precious metal, given the inverse price correlation between the two assets.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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