Gold finds support despite strong dollar
The recent rise in gold prices comes against the backdrop of escalating tensions in the Middle East, which has increased safe-haven buying. Traders are also positioning ahead of the upcoming US Consumer Price Index (CPI) report, which could shape expectations for future Federal Reserve (Fed) interest rate decisions.
While the dollar’s strength has traditionally been a headwind for gold, the metal has shown resilience. This suggests that some investors are hedging against persistent geopolitical risks, despite the dollar’s upward trajectory.
The Dollar Index (DXY) rose to its highest level since mid-August, but the impact on gold remained limited.
Fed Rate Outlook and Market Sentiment
The minutes of the September meeting of the US Federal Reserve showed mixed feelings among policymakers. A majority favored a 50 basis point rate cut, citing progress in curbing inflation toward the 2% target.
However, some members called for a smaller cut of 25 basis points due to concerns about solid economic growth and low unemployment rates.
Dallas Fed President Lorie Logan expressed caution about the economic outlook and suggested a preference for more moderate rate cuts in the future. Similarly, Boston Fed President Susan Collins reiterated the need for a flexible, data-driven approach to monetary policy.