- Gold forecast edged higher as the dollar lost traction amid rising bets on Fed easing in December.
- US PPI and Consumer Confidence data showed softness, adding more to the gold bulls.
- Markets await key US data and Fed commentary to find more clues about gold’s directional bias.
The gold forecast has turned higher as the price gained to near a 10-day peak, with traders continuing to price in a December Fed rate cut, driven by a series of soft US economic data and dovish commentary from Fed officials. The market reaction remains straightforward as the greenback fell to a one-week low, Treasury yields retreated to a one-month trough, and gold benefited from these conditions, being a non-yielding asset.
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The latest Produce Price Index data showed an annual rise of 2.7% in September, in line with easing inflation pressure. Meanwhile, Retail Sales came at 0.3%, while Consumer Confidence fell to a 7-month low amid cooling labor market signals. Several policymakers reinforced the need to lower rates, with John Williams noting that the easing will not threaten inflation targets. Christopher Waller also supported a 25-bps reduction in December, while Stephen Miran argued that a softening economy requires larger cuts to return policy to neutral.
These signals have pushed the rate cut odds swiftly higher, with traders now pricing in a probability above 80% of a 25-bps cut at the December meeting. This capped the dollar’s ability to gain traction, supporting gold during the Asian session on Wednesday.
Global risk sentiment has also improved due to recent peace efforts between Russia and Ukraine, which have reduced the intensity of safe-haven flows. Even then, gold managed to attract demand as the broader macro backdrop pushed yields lower. The move higher occurs despite a decline in Chinese physical demand, with net gold imports plunging to 64% in October via Hong Kong. However, this could have an impact later, when global conditions weaken further.
Gold Key Events Ahead
Traders remain focused on the US data cycle and Fed rhetoric. The upcoming data includes:
- Durable Goods Orders
- Weekly Jobless Claims
- Chicago PMI
Commentary from influential FOMC members will also be critical to watch.
Gold Technical Forecast: Bulls Need Trendline Breakout
The gold price broke above the MAs cluster on Tuesday but remains capped by the falling trendline. The upside lacks follow-through momentum as the RSI is near the overbought region. However, the MA crossover keeps the metal supported.
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Breaking above the trendline resistance could aim to test the $4,200 level ahead of the November Swing high near $4,245. On the other hand, $4,100 remains a key support level amid the MA cluster, ahead of trendline support near $4,050.
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