Gold eyes weekly loss of over 3% as Fed interest rate decision looms

Gold prices were offered at the end of the week, hovering around the $4,000 per troy ounce threshold, according to FXStreet's market report. The metal was on course for a weekly loss of more than 3%. The report attributes the weakness to gains in the US dollar, a rebound in US Treasury yields across the curve and further gains in crude oil prices.

FXStreet notes that gold failed to benefit from Thursday's slump in equities and fall in US Treasury yields, which would often be supportive for the metal. The report points to several factors. One is that higher oil prices feed inflationary pressure, which reinforces expectations that interest rates will stay higher for longer. That raises the opportunity cost of holding a metal that pays no interest. Another is that some traders may have sold precious metals to cover losses in equities. A third is that technical selling likely added to the pressure after gold broke below the $4,100-$4,200 range that had largely held since the start of October.

On the dollar and yields, FXStreet says the US Dollar Index, which tracks the greenback against a basket of six major currencies, traded around 101.70, up 0.11%. The benchmark 10-year US Treasury yield stood at about 5%, up from 4.95% on Thursday. The report says both showed signs of stabilising after Thursday's declines. It adds that gold remains vulnerable to renewed selling on rebounds.

The link between gold and interest rates is the central theme. Gold yields nothing, so it tends to rise when interest rates fall and to come under pressure when the cost of money rises. FXStreet adds that most day-to-day moves depend on how the US dollar behaves, because gold is priced in dollars as XAU/USD. A stronger dollar makes the metal more expensive for buyers holding other currencies, while a weaker dollar has the opposite effect.

All eyes are now on the Federal Reserve. A separate FinanceFeeds market summary, updated on 24 October, says the Federal Open Market Committee meets on 27-28 October, with the decision due at 2 pm EDT on Wednesday. It cites Kitco as putting spot gold at about $3,996 in late US trading on Friday, down roughly 0.7% on the day. It also cites Reuters as describing the session's intraday low as the weakest level since 20 July. FinanceFeeds adds that silver fell below $54 for the first time this year, and that Brent crude settled near $116.72. These figures come from that secondary summary, and readers should check them against the original data providers.

What happens next will depend on the Fed's message and on incoming US data, including inflation figures due later in the week according to FinanceFeeds. Both could influence expectations for interest rates, Treasury yields and the dollar. Those expectations are the main drivers of gold in the current environment, as the FXStreet report describes it. Markets are often volatile around central-bank meetings, and past patterns do not guarantee how gold or the dollar will react.

This article is for information only. It is not investment advice and does not suggest any trade or price outlook.

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This is a news summary for general information only — not financial advice, and nothing here is a recommendation to buy or sell any currency or metal. Exchange rates and gold prices can move sharply around data releases and central-bank decisions, and trading them carries a real risk of loss, which leverage magnifies. Always verify against the original source and do your own research before making a financial decision.