Gold Price Forecast: XAU/USD rises to near $4,150 as Fed rate cut bets grow
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Gold price climbs to near $4,140 in Tuesday’s early Asian session.
Bets of a Fed rate cut next month stand at 79%, the CME FedWatch tool showed.
The US ADP Employment Change, Retail Sales, and Producer Price reports will be the highlights on Tuesday.
Gold price (XAU/USD) attracts some buyers to around $4,140 during the early Asian session on Tuesday. The precious metal rises on growing expectations of a US Federal Reserve (Fed) interest rate cut in the December policy meeting. Traders await the release of the US ADP Employment Change Weekly, Retail Sales, and Producer Price reports, which are due later on Tuesday.
Several Fed officials signalled support for a December rate reduction, which underpins the yellow metal. Fed Governor Christopher Waller said on Monday that available data showed the US job market remains weak enough to warrant another quarter-point rate cut at the Fed's December policy meeting. Meanwhile, San Francisco Fed President Mary Daly stated that the US central bank should cut the rates as the labor market has become increasingly vulnerable.
"The market is increasingly getting convinced that the U.S. Federal Reserve is on track to cut interest rates in December," said Bart Melek, head of commodity strategies at TD Securities. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. Markets are now pricing in nearly an 80% chance of a Fed interest rate cut of a quarter-point next month, up from 30% odds before their remarks, according to the CME FedWatch tool.
Traders brace for fresh US economic data later on Tuesday for further clues on the monetary policy. The US Producer Price Index (PPI) is expected to show an increase of 0.3% MoM in September, while the Retail Sales are projected to show a rise of 0.4% MoM during the same period. If the reports show hotter-than-expected outcomes, this could lift the US Dollar (USD) and weigh on the USD-denominated commodity price.
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