Gold (XAU/USD) extended its losses for the sixth straight day after the Federal Reserve (Fed) released its September meeting minutes, which revealed that a “substantial majority” of the Federal Open Market Committee (FOMC) members supported a 50-basis-point rate cut. Despite this, gold continues to trade near familiar levels, hovering around $2,610, down 0.37% for the day.
The minutes also showed that while all participants favored cutting interest rates, some officials preferred a smaller 25-bps reduction. The discussion reflected the Fed’s ongoing balancing act between managing inflation risks, which most officials saw as declining, and addressing risks to the labor market, which were viewed as increasing.
Following the release of the minutes, the CME FedWatch Tool showed a decrease in market expectations for another 25-bps rate cut, dropping from 85.2% to 75.9%. This suggests that some investors are now betting on the possibility that the Fed could leave rates unchanged, with those odds rising from 14.8% to 24.1%.
Meanwhile, US Treasury yields climbed, with the 10-year note reaching 4.062%, up by five and a half basis points. This increase in yields supported the US Dollar, which strengthened to its highest level since mid-August 2024, as the US Dollar Index (DXY) gained 0.42% to hit 102.90.
Traders are now turning their attention to Thursday’s release of the US Consumer Price Index (CPI), with estimates pointing to further declines in inflation. However, if inflation comes in higher than expected, it could prompt the Fed to pause its easing cycle, potentially adding further pressure to gold prices.
This week’s US economic data schedule is packed with key releases, including inflation figures, job data, and speeches from Fed officials, all of which will be closely watched for signals on the future of interest rates.
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