Gold edged higher on Monday as traders weighed the Federal Reserve's next move. Bets that the Fed will skip a rate hike this month grew after remarks from Chair Kevin Warsh. A technical analysis note points to a weaker bias for the week ahead.
Gold prices edged higher on Monday as investors assessed the outlook for Fed policy. Spot gold rose 0.1% to $4,168.53 an ounce, while gold futures gained 0.2% to $4,189.40 an ounce.
Bullion ended the previous week down 0.7%. However, traders increased bets that the Fed will skip a rate hike this month after remarks from Chair Kevin Warsh last week. The central bank is then expected to lift rates in December.
Fed hikes and gold's support
In September, the Fed hiked borrowing costs for the first time since 2023, citing a need to corral mounting inflationary pressures. Higher rates can weigh on gold because bullion does not pay interest.
Still, the metal has hovered above the $4,000-an-ounce support level since August, thanks in part to safe-haven demand. ANZ analysts added that fiscal and debt-sustainability concerns make elevated yields look less like a sign of stronger growth and more like a reason to hold gold as a hedge.
ANZ expects gold's upside to remain capped in the short term before prices move above $5,000 an ounce in 2027. Gold also remains down around a fifth since late February, when the outbreak of the Iran conflict sent energy prices surging and fueled inflation fears.
Analyst eyes a break below 4150
A separate Investing.com analysis says gold reached trend line resistance at 4185/4190 and then pulled back to a low of 4156. The author adds that gold only closed down $20 on Friday, from Sunday's open.
The author has a more negative bias at the start of the week, so a break below 4150 can target 4130, perhaps as far as 4110. On the upside, a break above 4230 should be a decent buy signal, according to the same analysis.
Sources: Investing.com, Investing.com analysis
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