Gold Under Pressure as the Dollar Strengthens Again

Gold prices remained under pressure during Thursday’s trading (October 29), hovering around US$4,030 per troy ounce. The resurgence of the US dollar—following a correction in the wake of the FOMC meeting—has been a primary factor weighing on gold.

At its October meeting, the Federal Reserve opted to keep interest rates unchanged, with a 10-2 vote; however, two officials favored a rate hike. Comments from Kevin Warsh regarding the need for vigilance against persistent inflation have further fueled expectations for additional policy tightening.

The market now estimates an approximately 80% probability of an interest rate hike in December. These expectations have bolstered the appeal of the dollar, making gold—which yields no return—less attractive to investors.

Geopolitical risks in the Middle East have also driven demand for the dollar as a safe-haven asset. Despite efforts by Qatar and other parties to revive US-Iran negotiations, tensions persist, particularly following attacks by the Houthi group on energy facilities in Saudi Arabia.

These conditions have kept oil prices elevated, heightening concerns regarding inflationary pressure. Should energy prices continue to climb, the likelihood of a tighter monetary policy increases, potentially exerting further pressure on gold.

Nevertheless, investors may refrain from making major moves ahead of the release of key US economic data. Third-quarter GDP and the Personal Consumption Expenditures (PCE) price index will be the primary focus, as they may offer clearer signals regarding the Fed’s policy direction and determine whether the pressure on gold will persist or begin to ease. (srh)

Source: Newsmaker.id