Gold is consolidating around $4,040 as expectations for a December Fed hike remain elevated. A stronger dollar, high oil prices and a sell-off in Chinese stocks could weigh on the metal in the short term.
December gold futures remain steady at around $4,040 as spot gold consolidates after the FOMC meeting. Traders now turn to next week's U.S. midterm elections.
Fed hike odds keep pressure on gold
Fed Chair Kevin Warsh noted that inflation has stayed above the Fed's 2% target for six years. His comments suggested he may be reluctant to implement many additional rate hikes, though his policy priorities for 2027 remain unclear.
Markets nonetheless reacted hawkishly. The U.S. Dollar Index moved back toward the 102.00 level, which could put further pressure on gold prices.
The CME FedWatch Tool shows a 79.6% probability of a 25-basis-point hike in December. Expectations for a rate hike remain elevated.
Oil and China add to the downside risk
Brent crude holds at around $110 per barrel, near its highest level in six months. Persistent inflation concerns could reinforce expectations of a December hike and put further downward pressure on gold in the short term.
In Asia, China's stock market wiped out more than $240 billion in market capitalization during the trading session. That could prompt some investors to sell gold to meet margin calls.
Key technical levels
A break below the $3,975 swing low could pave the way for a decline toward $3,950, a level not seen since July.
On the upside, a break above $4,085 may retest $4,100, and a decisive breakout above that level would be needed to strengthen bullish momentum.
Source: Investing.com
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