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Source: Newsmaker.id
Gold prices strengthened on Wednesday (October 28) as the U.S. dollar weakened, following remarks by Federal Reserve official Kevin Warsh that U.S. financial conditions have tightened since the September interest rate decision. Spot gold rose 0.2%, while gold futures climbed 0.8%.
The Fed previously maintained interest rates in the 3.75%–4% range, with a 10-2 vote in favor of the decision. Two officials, Lisa Cook and Beth Hammack, had opted for a 25-basis-point hike. The outcome aligned with market expectations, even though recent U.S. inflation data indicated higher-than-anticipated pressure.
In a press conference, Warsh noted that labor market conditions remain relatively positive, leading the Federal Open Market Committee (FOMC) to focus primarily on inflation. He also highlighted a tightening in financial conditions and a shift in market participant behavior since the September meeting.
These comments provided some room for gold to gain, as tighter financial conditions could reduce the pressure on the Fed to aggressively tighten policy. However, Warsh offered no clear guidance on the future direction of interest rates, emphasizing that upcoming decisions will be heavily dependent on incoming economic data.
The market is now awaiting key data, including U.S. third-quarter economic growth and the Personal Consumption Expenditures (PCE) inflation indicator for September. Both datasets will be crucial for the Fed in shaping its next policy moves—a point underscored by Warsh, who noted that the period ahead will be marked by significant economic information.
Meanwhile, rising oil prices have capped gold’s gains. Brent crude rose 1.1% amid escalating conflict between the Iran-backed Houthi group and the Saudi-backed Yemeni government. Attacks on Saudi energy facilities have reignited concerns regarding potential supply disruptions.
Newsmaker Analysis: Gold has found support from a weaker dollar and signs of tightening financial conditions; however, rising oil prices pose a risk by potentially keeping inflation elevated. The focus now shifts to upcoming U.S. GDP and PCE data. If inflation softens, a golden opportunity for continued gains emerges; conversely, data that comes in hot could reinforce expectations for a tighter policy stance from the Fed.
Source: Newsmaker.id