Gold's Struggle as Fed Rate Hike Bets Ease and Dollar Strengthens
Gold (XAU/USD) is struggling to gain momentum this week, caught between easing Federal Reserve rate hike expectations and a stronger US Dollar. The precious metal is trading around $4,158, up just 0.35% on the day, as investors weigh the latest economic data. Recent US employment figures were weaker than expected, with Nonfarm Payrolls rising only 29K in September, far below the forecast of 90K. The Unemployment Rate also edged up to 4.2%, while annual wage growth slowed to 3.0%. These figures have reduced the likelihood of a Fed rate hike in October to around 20%, down from nearly 70% last week.
Despite the softer employment data, economists at Deutsche Bank argue that the broader labour market remains resilient. They still expect two more 25 basis point rate hikes over the next few quarters. The US Dollar is drawing additional support from political and fiscal concerns in France, with the US Dollar Index (DXY) trading near 102.20. Meanwhile, the 10-year US Treasury yield remains elevated near 5.29%, making Gold less attractive as a non-yielding asset.
Looking ahead, key economic data releases this week include the ISM Services PMI on Monday, the FOMC meeting minutes on Wednesday, and Initial Jobless Claims on Thursday. The University of Michigan Consumer Sentiment Index and inflation expectations will be released on Friday. Technically, Gold is consolidating below its major moving averages, with buyers struggling to reclaim the $4,200 level. A sustained break above this area could expose further resistance at $4,265 and $4,374, while immediate support lies at $4,100.