Gold closed around $4,290 on Wednesday after a hot US business-activity report and a firmer dollar pushed traders to raise their odds on another Federal Reserve rate hike. The metal slid to a two-week low near $4,250–$4,280 on Thursday and remains down roughly 9% over the past month.
Flash PMI data lifts the dollar
Gold stalled just under $4,400 on 18 September and never got back there. On Wednesday, the US flash composite PMI came in at 58.4 and services at 58.7, the fastest pace of business activity in more than five years, and the dollar climbed to a near two-month high. Fed officials lined up behind last week's rate hike; Governor Barr said further policy adjustments are "likely to be needed".
Gold slides through the $4,300 floor
Monday opened with a firmer dollar, and spot gold slipped about 0.7% to around $4,346. Then, on Wednesday, gold fell through $4,300 and closed the session around $4,290. It stayed below that level on Thursday, trading down into the $4,250–$4,280 area, a two-week low.
Rate-hike odds jump
Underneath the price move, the rate path was being repriced. CME FedWatch put the odds of another 25 basis point hike on 28 October at roughly 70%, up from about 55% a day earlier. Oil prices fell early in the week, a move that typically supports bullion, but gold kept sliding anyway. The metal is down roughly 9% over the past month and about a quarter below January's record.
What comes next
Friday's PCE inflation release is the next scheduled catalyst, followed by the FOMC meeting on 28 October, where a hike is currently priced at around 70%. Above the market, the $4,380–$4,400 band that capped the post-hike rally remains the ceiling; below, traders are watching the $4,230 area and the round $4,200 level that many analysts treat as a baseline.
Source: MQL5: Traders' Blogs
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