Fed keeps dovish, how will gold prices move?

The price of gold on the global market increased this week from $3,999 to $4,245 per ounce before plummeting to $4,032 and closing at $4,084.

The price of SJC gold bars posted by DOJI rose from VND 149.6 million/tael to VND 154 million/tael before falling to VND 151 million/tael on the Vietnamese gold market.

White House Press Secretary Karoline Leavitt stated that the Bureau of Labor Statistics (BLS) may never release October employment and inflation data because the federal government shutdown during that time prevented statistical work, which is why gold prices spiked this week following news that the US government reopened. Due to the selling pressure these remarks put on the USD, the price of gold surpassed $4,200 per ounce.

But following that, the price of gold fell precipitously to $4,032/oz due to aggressive remarks made by Fed officials. In particular, St. Louis Fed Governor Alberto Musalem said that the labor market is anticipated to stay close to full employment and that the Fed should exercise caution when implementing monetary policy at this time. Neel Kashkari, the governor of the Minneapolis Fed, stressed that the Fed should halt interest rate decreases since inflation is still too high.

Although gold prices are now in a neutral condition, analysts point out that they are still in a long-term uptrend, particularly as the gold market starts to question whether the Fed would lower interest rates in December.

The market believes there is a 50% probability the Fed will lower interest rates by December, according to CME's FedWatch tool. As a result, compared to the 90% observed around a month ago, this anticipation rate has drastically dropped.

Gold prices may continue to suffer in the near future as a result of the market's precipitous slide, which was fueled by anticipations of a Fed rate cut in December. "The gold rally is being strongly challenged, with gold prices falling more than 4% this week and a wave of selling spreading across the gold market as investors grow increasingly skeptical about interest rate cuts," stated Neil Welsh, Director of Metals Trading at Britannia Global Markets.

This fact demonstrates how significantly the FED's monetary policy signals influence the attitude of the short-term gold market. However, given the ongoing macroeconomic challenges, geopolitical tensions, and rising central bank demand for gold, it will be challenging for gold prices to drop much.

According to Mr. Christopher Vecchio, Head of Futures and Forex Strategy at Tastylive.com, given the market's continued pessimism on the Fed's potential for more interest rate cuts, gold prices may continue to decline and accumulate next week. There will be some high-level short-term profit-taking in the gold market. Christopher Vecchio underlined, "He still wants to purchase gold when the price lowers significantly.

Official economic statistics will still be delayed even after the US government shutdown has ended. Nonetheless, US house sales and regional and preliminary output figures will shed some light on the "health" of the US economy.

There are unmistakable indications that the US labor market is losing substantial momentum even in the absence of October economic statistics. Inflation was high at the period, although it did not rise significantly. In the end, inflation is still too low to stop the Fed from lowering interest rates, particularly because President Donald Trump is still pressuring the Fed to do so. Additionally, it will be challenging for gold prices to drop much if they continue to decline next week.

Technical analysis indicates that $3,937/oz is the support level for gold prices next week. In the near future, the price of gold will stay around $4,000/oz if it stays above this level. However, the price of gold may plummet to the $3,800/oz region if it drops below this level next week.