Gold rises on mixed US data, although dovish Fed tone limits gains

• Gold edged back from a daily low of $2,603 ​​after U.S. inflation data showed a slight pick-up, tempered by weaker jobs numbers.
• The swaps market now expects the Fed to cut rates by 25 bps at its November meeting, boosting bullion prices.
• Fed officials, including Austan Goolsbee and John Williams, have suggested gradual rate cuts, while Raphael Bostic remains open to ending cuts in November.

Gold prices rebounded during the North American session on Thursday, rising about 0.67 percent after a hotter-than-expected U.S. inflation report that was tempered by weak U.S. jobs data. However, recent comments from a Federal Reserve (Fed) official capped the precious metal’s advance. XAU/USD is trading at $2,624 after recovering from a daily low of $2,603.

August inflation in the United States (US) was slightly higher than expected, although jobs data offset it. The US Labor Department announced that more people than expected have applied for unemployment benefits, which could prompt the Fed to aggressively lower borrowing costs.

After the data, the swap market sees the Fed cutting interest rates by 25 bps at the November meeting.

The US economic program featured several Fed speakers. First, Chicago Fed President Austan Goolsbee said he sees gradual tapering over the next year and a half now that inflation is close to the Fed’s 2 percent target.

New York Fed President John Williams said he expected more rate cuts at an appearance in Binghamton, New York. He added: “The timing and pace of future interest rate adjustments will be based on data developments, the economic outlook and risks to our targets.”

Atlanta Fed President Raphael Bostic, a 2024 FOMC voter, recently commented that he is open to ignoring rate cuts in November, according to The Wall Street Journal.

Bullion traders will be watching Friday’s release of the University of Michigan’s (UoM) producer price index (PPI) and consumer sentiment.

Daily market reasons: Gold price rises despite high US yields, strong USD

• Gold price growth remains capped by rising US Treasury yields. The benchmark US 10-year note rose two basis points to 4.096%.
• As a result, the dollar is making gains, as seen by the US Dollar Index (DXY). DXY registers minimal gains of 0.09% at 102.97.
• The US consumer price index (CPI) for September rose 2.4% from a year earlier, beating estimates of 2.3%, though still lower than August’s figure. Core CPI rose 3.3% year-on-year, beating forecasts and 3.2% from August.
• On a monthly basis, CPI rose 0.2%, unchanged from the previous month and above the consensus estimate of 0.1%. Core CPI was steady at 0.3%, beating the 0.2% forecast.
• Initial jobless claims for the week ended Oct. 5 rose to 258,000 from 225,000 the previous week and topped the estimate of 230,000.
• John Williams of the New York Fed expects inflation to end at 2.25% in 2024 and GDP to reach 2.25% to 2.50% by the end of the year.
• Data from the Chicago Board of Trade via the December federal funds rate futures contract shows investors expect 47 bps of Fed easing by the end of 2024.

XAU/USD Technical Analysis: Gold Price Uptrend Resumes But Remains Below $2,650

The price of gold resumed its uptrend after falling to a weekly low of $2,603. Although momentum has been negative for the past six days, it turned slightly positive on Thursday as seen by the tracking Relative Strength Index (RSI). However, XAU/USD needs to break the October 8 daily high of $2,653, so buyers may remain hopeful of challenging the YTD high at $2,685.

If gold clears $2,653, the next resistance would be the $2,670 area ahead of $2,685. Conversely, if XAU/USD remains below $2,650, this could sponsor a decline towards $2,600. A breach of the latter will expose the 50-day simple moving average (SMA) at $2,540.