Investors are now focused on new insights from Federal Reserve policymakers, with Fed Governor Adriana Kugler emphasizing that the US labor market remains resilient despite some cooling. The Fed is aiming to avoid a sharp slowdown in employment, which could further dampen growth expectations. Meanwhile, the CME FedWatch tool suggests that market participants are no longer pricing in a 50 basis point rate cut at the Fed’s upcoming November meeting, with odds now favoring a 25 basis point cut.
Geopolitical tensions and the demand for physical gold influence prices
Geopolitical risks, especially ongoing tensions in the Middle East, continue to support demand for gold as a safe haven. Israel’s recent expansion of ground operations in southwest Lebanon has increased market uncertainty, keeping gold prices underground as investors seek protection from potential global disruptions.
In China, gold demand remains subdued, with the country’s central bank refraining from increasing its gold reserves for the fifth month in a row. Gold prices in Shanghai are still trading at a discount compared to London benchmarks, indicating weak physical demand in the world’s largest gold-consuming market. During the post-Golden Week holiday session, gold prices in China recorded their worst performance since 2017, contradicting earlier reports of increased consumer purchasing.
Gold market forecast
The near-term outlook for gold remains uncertain, but somewhat bullish as long as prices remain above $2616.25. A break above $2685.64 could lead to further gains, especially if the US dollar weakens and Treasury yields continue to fall.