Gold Struggles as Strong Dollar Counters Easing Rate Hike Bets
Gold prices are stuck in a narrow trading range as a stronger US dollar and higher Treasury yields counteract easing expectations of a Federal Reserve rate hike. The market is digesting mixed economic data, including weaker-than-expected employment figures and revised inflation data, which have reduced the likelihood of an October rate hike to just 20%. However, persistent inflation concerns keep the Fed's policy stance tilted toward further tightening, limiting gold's upside potential.
On Monday, spot gold traded at $4,128.02, down 0.30%, as the US dollar index hit an intraday high of 102.53 before retreating slightly. The benchmark US 10-year Treasury yield remains near 5.30%, increasing the opportunity cost of holding non-yielding assets like gold. Deutsche Bank economists still expect two more rate hikes in the next two quarters, despite the recent weak employment data.
Technical analysis shows gold struggling to break above $4,200, with key resistance at the 50-period moving average of $4,195.64. The Relative Strength Index (RSI) and MACD indicators suggest weak momentum and bearish dominance. If gold fails to hold above $4,160, further downside pressure could target support levels at $4,110 and $4,100.
Looking ahead, traders will focus on the September FOMC meeting minutes, initial jobless claims data, and consumer sentiment reports. The market's direction will depend on whether the Fed maintains its hawkish stance or signals a shift in policy.