Gold Closes at $4,036.85 Ahead of Fed Decision After Giving Back Previous Session’s Gains
Key Facts
Spot gold fell to $4,036.85 at the October 28 close, after reaching $4,060.33 the previous day, according to EL7 data, as markets awaited the Federal Reserve’s interest rate decision. The lower close followed Tuesday’s session, when the metal rose more than 1%, Reuters reported, while an Investing.com report showed it had climbed 1.1% to $4,060.33 an ounce. On Wednesday morning, it had risen 0.1% to $4,061.86 an ounce at 00:36 GMT, following the previous session’s gains, according to a Reuters report via Fidelity. These moves show gold’s course shifting from a rise during Tuesday’s session to a decline at Wednesday’s close, while the Fed meeting remained the focus of markets.
Oil’s decline was among the factors supporting gold in Tuesday’s session, with Reuters linking lower crude prices to the metal’s rise ahead of the Fed meeting. Peter Grant, vice president and senior metals strategist at Zaner Metals, said, "Lower oil prices will likely provide some support for gold because they ease inflation concerns." Brent crude fell 1.5% to settle at $114.10 a barrel on October 27, according to an Investing.com report citing Reuters. The report attributed crude’s decline to easing concerns about supply disruptions amid regional diplomatic efforts, while supply concerns remained. Saudi Arabia, Turkey and Pakistan held talks with Iranian officials in Tehran on Monday, and Saudi Arabia said the visit aimed to open negotiating channels "to prevent a return to military escalation." Houthi attacks on Saudi Arabia kept supply risks in place despite those efforts, Reuters reported.
Gold’s moves came after a week of sharp declines: the metal lost about 4% in the week ended Friday, October 23, its largest weekly decline since June, according to Reuters. It then recovered at the start of the following week, with attention focused on the Fed meeting and the potential path of monetary policy. At its previous meeting, central bank officials raised the target interest rate range by a quarter of a percentage point on September 16 to 3.75%-4%, noting that inflation remained elevated, according to the Fed statement. That previous decision provides context for the October meeting, as investors watch whether the central bank will leave rates unchanged, as a Reuters report published Wednesday morning expected. The Federal Open Market Committee meeting is scheduled to run on October 27 and 28, with the press conference set for October 28, according to the Fed calendar.
Against the backdrop of the economy, the U.S. consumer confidence index rose to 91.7 points in October from 84.2 in September, an increase of 7.5 points, according to the Associated Press. Consumers’ assessment of current conditions rose by 6.9 points to 72.6, while the short-term expectations index climbed 8.6 points to 120.4. An economist at the Conference Board attributed the improvement in confidence to falling gasoline prices from September to October, saying, "The recovery was consistent with a decline in retail gasoline prices from September to October." By contrast, an economic calendar summary had pointed to an expected 1.8% increase in September durable goods orders, compared with a previous reading of 0.0%; those expectations appeared in the summary published on October 27. The differing indicators add context as markets track demand and inflation ahead of the Fed decision, without changing the timing of the next scheduled data.
Attention after the meeting will turn to the September personal income and spending report, scheduled for release on October 29 at 8:30 a.m. Eastern time, according to the U.S. Bureau of Economic Analysis. The report includes personal consumption expenditures price data, the inflation measure tracked by the Fed, according to the Associated Press. The report forecast that the personal consumption expenditures price index would rise 3.6% year over year in September, versus 3.4% in August. It also forecast that the core index, which excludes food and energy, would post an annual increase of 3.1%, up from 3% in August. These estimates come as investors monitor inflation ahead of the interest rate decision. The October decision and press conference are scheduled for October 28, according to the Federal Reserve calendar.