Gold claws back above $4,050 as oil eases, Fed decision looms
Gold rebounded above $4,050 after briefly dipping under $4,000, helped by softer oil prices, even as the US dollar and Treasury yields firmed. OCBC strategists say the metal's next move hinges on the Fed and Thursday's core PCE data.
OCBC strategists Sim Moh Siong and Christopher Wong said gold’s bounce came as oil prices softened on renewed diplomatic efforts in the Middle East, taking some pressure off the metal. A rebound in technology stocks may also have eased broader selling tied to forced liquidation across markets, they said.
Despite that relief, US Treasury yields remain elevated and markets are still pricing a strong chance of another Fed rate hike in December. The OCBC strategists expect the Fed to hold rates steady at its upcoming meeting, but said the central bank’s guidance on the path ahead will matter more than the decision itself.
They added that Thursday’s core PCE inflation reading could either support or undercut the Fed’s messaging. A further drop in oil prices alongside softer yields and a weaker dollar could extend gold’s recovery, they said, whereas a hawkish Fed or a fresh bout of equity deleveraging could quickly reverse it.
On the charts, OCBC noted that bearish momentum on the daily chart is fading, with the relative strength index turning higher from oversold levels, a tentative sign of stabilization rather than a confirmed turnaround.
The strategists said they continue to see “two-way risks” for gold at this stage.
Why it matters: The Fed’s rate guidance and the core PCE reading are likely to drive near-term moves in gold (XAU/USD), the US dollar and Treasury yields, since softer yields and a weaker dollar typically support gold, while a hawkish Fed tends to pressure it.
Sources: FXStreet; investingLive