Investorideas.com

Call 800 665 0411 to learn about our services for your stock

Search   Follow Investorideas on Twitter   Investorideas is on Facebook   Investorideas is on Youtube   Investorideas is on Pinterest  Investorideas is on stocktwits   Investorideas is on tumblr   Investorideas is on LinkedIn   Investorideas Instagram   Investorideas Telegram   Investorideas Gettr   Investorideas RSS




Share on StockTwits

Gold prices below $2,630, and the Fed minutes will decide market direction

 

October 9, 2024 (Investorideas.com Newswire) Investorideas.com (www.investorideas.com), a go-to platform for big investing ideas releases market commentary from Rania Gule Senior Market Analyst at XS.com.

Gold prices dropped sharply yesterday, starting Wednesday's trading at $2,617 after a strong U.S. jobs report boosted expectations that the Federal Reserve may slow down its rate cuts. This negatively impacted gold, which offered no yield. Additionally, news reports suggesting support from parties in the Middle East conflict for efforts to achieve a ceasefire prompted investors to take profits. The prospects of easing tensions shifted capital from safe-haven assets like gold to higher-risk assets such as stocks.

At the same time, gold is facing additional pressure from rising U.S. Treasury yields, which remained above 4% following the strong non-farm payroll report. I expect that any reduction in geopolitical tensions will lead to continued selling of gold, especially if U.S. stocks keep gaining amid improved market sentiment. As investors await U.S. inflation data and the Federal Reserve's meeting minutes, any further hints about policy stability could push gold prices even lower, particularly if the Fed takes a more cautious approach to rate cuts.

The yellow metal has declined for six consecutive days and remains below the key support level of $2,630. In my view, gold is influenced by several fundamental factors, including the strength of the U.S. dollar, investor expectations of upcoming monetary policy decisions from the Federal Reserve, and recent geopolitical developments. With the market waiting for the Federal Open Market Committee (FOMC) minutes and U.S. inflation figures, the main question remains: which direction will gold prices take in the coming period?

I believe many traders are preferring to wait before making significant decisions on gold until the release of the Fed minutes. The minutes are expected to provide a clearer view of the likely path for rate cuts in the U.S. Inflation numbers due in the coming days could also be critical, as their impact will closely align with the Fed's stance on rate reductions. Historically, gold prices tend to move inversely to the U.S. dollar; rate cuts usually weaken the dollar and increase demand for gold as a safe-haven asset.

Currently, the U.S. dollar index (DXY) is near a seven-week high, adding pressure on gold prices. A stronger dollar reinforces the view that the Federal Reserve may not be in a hurry to make significant rate cuts, especially as expectations of a large reduction at the upcoming November meeting have eased. This scenario, along with a potential ceasefire in the Middle East, has reduced gold's short-term appeal as a haven.

From an economic and fundamental perspective, it is expected that the Federal Reserve will gradually slow the pace of rate cuts. Investors are factoring in over an 85% chance that the Fed will cut rates by 25 basis points at the November meeting. If that happens, we might see stability or even a rebound in gold prices, especially if economic conditions remain weak and inflation continues to gradually decline.

Many Federal Reserve officials have recently stated that the current monetary policy aims to control inflation without harming economic growth, which may limit gold's short-term rise. In my opinion, U.S. Treasury yields play a key role in influencing gold. The yield on 10-year bonds has surpassed 4%, increasing the pressure on non-yielding gold. When yields are high, investors prefer to hold assets that provide direct returns, such as bonds, over non-yielding assets like gold.

On the geopolitical front, recent reports of a possible ceasefire in the Middle East have provided some relative easing of tensions in the region. While geopolitical conflicts usually support gold as a haven, any positive developments in this area could contribute to further pressure on the yellow metal.

In my view, gold remains in an unstable position for now, as investors closely watch the FOMC minutes and upcoming inflation data. These events could be pivotal in determining gold's direction in the coming weeks. Despite the current pressures, any indication of easing inflation or U.S. monetary policy could provide new support for gold. However, the biggest challenge remains how gold will cope with a strong dollar and high bond yields. Therefore, expectations are tied to upcoming economic and geopolitical developments.

About Investorideas.com - Big Investing Ideas

Investorideas.com is the go-to platform for big investing ideas. From breaking stock news to top-rated investing podcasts, we cover it all. Our original branded content includes podcasts such as Exploring Mining, Cleantech, Crypto Corner, Cannabis News, and the AI Eye. We also create free investor stock directories for sectors including mining, crypto, renewable energy, gaming, biotech, tech, sports and more. Public companies within the sectors we cover can use our news publishing and content creation services to help tell their story to interested investors. Paid content is always disclosed.

Disclaimer/Disclosure: Alaska Energy Metals Corporation is a paid featured mining stock on Investorideas.com, Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact management and IR of each company directly regarding specific questions. More disclaimer info: More disclaimer and disclosure info https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release and our other news services on the Investorideas.com newswire https://www.investorideas.com/News-Upload/ Global investors must adhere to regulations of each country. Please read Investorideas.com privacy policy: https://www.investorideas.com/About/Private_Policy.asp

Learn more about our news, PR and social media, podcast and ticker tag services at Investorideas.com

https://www.investorideas.com/Investors/Services.asp

Learn more about digital advertising and guest posts

https://www.investorideas.com/Advertise/

Research more mining stocks with Investorideas.com free stock directory

https://www.investorideas.com/Gold_Stocks/Stocks_List.asp

Follow us on X @investorideas @stocknewsbites

Follow us on Facebook https://www.facebook.com/Investorideas

Follow us on YouTube https://www.youtube.com/c/Investorideas

Sign up for free stock news alerts at Investorideas.com

https://www.investorideas.com/Resources/Newsletter.asp

Contact Investorideas.com

800 665 0411


Gold Mining Stocks - Gold Mining Stocks Directory, Gold Stocks News, Research and Resources

Investing ideas in gold and mining stocks

Like Gold Stocks? View our Gold / Mining Stocks Directory

Get News on Mining Stocks