Gold (XAU/USD) is likely to remain volatile in the coming week as investors focus on upcoming US inflation data and the Federal Reserve’s (Fed) stance on monetary policy.
After slipping 0.40% on Friday due to a robust Nonfarm Payrolls (NFP) report, Gold is struggling to regain its footing. The metal is currently hovering near $2,643, finding support above the critical $2,625 mark.
Key Events to Watch: US CPI and FOMC Meeting Minutes
Next week’s key risk events start with the release of the US Federal Open Market Committee (FOMC) Meeting Minutes on Wednesday, October 9, at 18:00 GMT.
Investors will parse through these minutes for hints on whether the Fed is considering further rate cuts, as suggested by some Fed officials. Any dovish commentary could provide relief to Gold and push it higher.
Thursday will see the release of the US Consumer Price Index (CPI) at 12:30 GMT. Headline CPI is expected to rise 0.2% month-on-month, with the year-on-year figure anticipated at 2.5%, up from 2.3% previously.
Core CPI, which excludes food and energy, is forecast to grow 0.3% month-on-month. Strong CPI data could reinforce expectations of a smaller 25 basis points (bps) rate cut in November, further strengthening the US Dollar and capping Gold’s upside.
Friday’s focus will shift to the US Producer Price Index (PPI) at 12:30 GMT, with both core and headline readings expected to show moderate growth.
Additionally, unemployment claims data on Thursday will offer more insight into the labour market’s health.
Technical Analysis: Can Gold Hold Above $2,600?
Gold’s current price action is consolidating within a range of $2,600 to $2,670. The $2,625 support level will be crucial for determining the short-term outlook.
A weekly close below $2,625 could signal additional downside, targeting $2,600 and $2,570. Conversely, a push above $2,670 would allow Gold to test $2,685 and possibly reach the psychological $2,700 level.
The Relative Strength Index (RSI) at 50 indicates a neutral stance, while the Moving Average Convergence Divergence (MACD) shows diminishing bullish momentum, suggesting that the metal may remain range-bound until a significant breakout occurs.
Key Levels to Watch:
- Immediate Resistance: $2,670
- Next Resistance: $2,685
- Immediate Support: $2,625
- Next Support: $2,600
Outlook and Summary
The direction of Gold prices this week will largely depend on US economic data releases and their impact on the Fed’s rate decision.
Any signs of elevated inflation from the CPI report could strengthen the US Dollar, weighing further on Gold. However, geopolitical risks—particularly in the Middle East—might offer support to Gold prices as a safe-haven asset.
Expect XAU/USD to trade within the $2,600 to $2,670 range ahead of these pivotal events. Traders should keep an eye on the US CPI and FOMC Meeting Minutes for a clearer sense of Gold’s next directional move.