Gold extended its losses on Friday as better-than-expected US PMIs eased growth concerns and fears of US strikes on Iran weighed on the metal. Real yields fell, which could point to a short-term pullback. The FOMC decision on Wednesday is the next test.
Gold extended its losses on Friday after US PMIs came out better than expected and quelled growth concerns for the time being. Expectations of US strikes on Iran over the weekend also weighed on the precious metal but eventually proved wrong.
Gold settles at 4010 after a 4.2% weekly drop
Investing.com's analysis says gold settled the week at 4010, down 4.2%, after touching a low of 3989 on Friday. Buyers had briefly pushed the price to 4050 earlier in the session.
The late-week downside seemed to be driven mainly by liquidations to cover losses in the stock market, according to investingLive. Real yields, which the outlet calls the ultimate driver of gold prices, actually fell, so a short-term pullback is possible.
FOMC and Fed Chair Warsh take focus
The Fed is widely expected to keep interest rates unchanged at its FOMC meeting on Wednesday. A surprise rate hike would trigger a strong selloff in gold. No Dot Plot is due at this meeting, so attention falls mostly on Fed Chair Warsh, who is reluctant to provide forward guidance.
Investing.com's analyst takes the opposite view and argues the FOMC will raise its funds rate on 28 October.
Key levels and the week's data
On the daily chart, investingLive points to key support around 3,885, where a major upward trendline also sits. Buyers could step in there, while sellers would look for a break lower toward 3,500. On the 4 hour chart, a pullback into 4,070 resistance could bring sellers back.
Beyond the Fed, the week's calendar includes the US GDP report, the US PCE and jobless claims on Thursday, and the US Employment Cost Index on Friday.
Sources: investingLive, Investing.com
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