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Source: Newsmaker.id
Gold (XAU/USD) prices remain slightly higher, hovering above the psychological US$4,000 level during early European trading (October 26), though they have yet to show strong, sustained momentum. An approximately 80% probability of a Federal Reserve interest rate hike before the end of the year, combined with demand for the US dollar as a safe-haven asset, continues to pose a challenge for a recovery in gold.
On the US economic front, the manufacturing PMI for October rose to 56.0—its highest level in 53 months—while the services PMI reached 57.9, and the composite PMI stood at 57.6. The rise in the output price index to 59.8, the highest since August 2022, suggests that inflationary pressures may persist, potentially reinforcing expectations for further monetary tightening by the Fed.
Additional pressure stems from rising oil prices, driven by supply concerns following attacks in Saudi Arabia and escalating tensions with Iran. Threats from the Houthi movement to continue targeting King Khalid International Airport in Riyadh, alongside stalled US-Iran negotiations, have kept geopolitical risks elevated, further bolstering demand for the US dollar as a safe haven.
The market’s primary focus is now on the FOMC decision this Wednesday. Investors will be closely monitoring the policy statement and comments from the Federal Reserve for clues regarding the future trajectory of interest rates. Upcoming decisions from the RBNZ, ECB, and BoJ are also likely to increase volatility in gold prices throughout the week.
Furthermore, US third-quarter GDP figures and the PCE Price Index, due on Thursday, will serve as key catalysts. Strong economic data and persistently high inflation could limit any rebound in gold, whereas more dovish policy signals might create room for a recovery. Given the current landscape, a move above US$4,000 is not yet sufficient to confirm that gold has established a definitive floor. (srh)
Source: Newsmaker.id