Gold Price Forecast: Is This Week’s Inflation Data a Game-Changer?
Markets closed last week on a more stable note after mixed US data kept the Fed in focus. The University of Michigan’s preliminary...
Quick overview
- Markets ended last week on a stable note, with the University of Michigan's consumer sentiment index rising to 55.0, indicating increased household optimism.
- Despite a dovish market, investor caution persists as FOMC minutes reveal concerns about inflation risks, while Powell's comments suggest a careful approach to rate cuts.
- Gold prices rebounded to reclaim the $4,000 level, supported by falling Treasury yields and safe-haven demand amid easing inflation fears.
- Key economic events this week, including Powell's speeches and various data releases, will influence the Fed's future policy direction and market volatility.
Markets closed last week on a more stable note after mixed US data kept the Fed in focus. The University of Michigan’s preliminary consumer sentiment index rose to 55.0 vs 54.1 expected, so households are slightly more optimistic. Inflation expectations dropped to 4.6% vs 4.7% previously, which helps the Fed ahead of the next policy statement.
But investor conviction remains cautious after the FOMC minutes showed several Fed members still see inflation risks to the upside. The market is dovish but Powell’s comments highlighted the central bank’s delicate balance – acknowledging progress on inflation but not cutting rates yet.
Risk assets were choppy as the US dollar index hovered around 99.2 and Treasury yields pulled back from recent highs. Gold, which benefits from falling yields, rebounded from midweek lows to reclaim the $4,000 handle supported by mild safe-haven demand and easing inflation fears.
Key Events This Week
This week is packed with market movers. Powell speaks twice – Tuesday (Oct 14) and later in the week – and any hints on rate direction will move commodities and currencies.
Other key data releases:
- Empire State Manufacturing Index (Oct 15): 0.2 vs -8.7 prior, possibly better regional output.
- Philly Fed Manufacturing Index (Oct 16): 9.1 vs 23.2, tests US growth momentum.
- Core PPI and Retail Sales (Oct 16): Will producer prices and consumer spending confirm slowing inflation?
- Unemployment Claims: Any increase will add to rate cut expectations later this quarter.
All these will determine if the Fed stays “higher for longer” or pivots to accommodation as data cools.
Gold (XAU/USD) Technical Analysis
Gold is inside a strong ascending channel, bouncing from the $3,965 0.382 Fibonacci and reclaiming short term momentum. 4-hour chart shows higher lows, a sign of sustained bullish control.
A bullish engulfing candle formed at $3,975, buyers back in after a small correction. RSI (57) shows a hidden bullish divergence – price up while momentum flat – a setup for another leg up.
If above $4,001, targets are $4,057, $4,093 and the channel top at $4,133. Below $3,910 exposes $3,871 where the 0.786 Fibonacci is major support.
For traders, a breakout above $4,020 is a clean long entry, stops below $3,938 to manage risk. With Fed speeches and inflation data coming up, volatility may increase – but the bigger picture is still bullish.
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