Gold Slips to Around $4,050 After Fed Keeps Rates Unchanged; Markets Await US PCE Data

• Gold trades on a weaker footing near $4,050 during early Asian trading on Thursday.
• An unchanged interest rate decision was accompanied by the Fed’s renewed pledge to bring inflation under control.
• Thursday’s US September PCE inflation release is awaited by traders for a fresh market catalyst.

Downward pressure on Gold price (XAU/USD) sees the metal ease towards $4,050 in Thursday’s early Asian session. With benchmark interest rates left unchanged at the US central bank’s October policy meeting, markets are weighing remarks from Federal Reserve (Fed) Chair Kevin Warsh.

A range of 3.75% to 4.00% was retained for the Fed’s benchmark federal funds rate. In the accompanying statement, policymakers expressed hope that forthcoming data would help guide their next decision.

At his press conference, Fed Chairman Kevin Warsh said officials have “made clear our readiness to act as circumstances require, and we have shown our willingness to act.”

Warsh said, “It’s our responsibility to get inflation down,” adding, “That’s the reason the FOMC’s discussion over the last couple of days focused mainly on the price stability side of our remit,”

Bets on a December Fed rate increase remained intact, although traders scaled back expectations for further hikes in 2027, Bloomberg reported. Three additional increases in the current cycle are no longer fully priced into futures markets. For non-yielding gold, higher interest rates raise the opportunity cost of holding the metal.

Attention later on Thursday turns to September’s US Personal Consumption Expenditures (PCE) inflation figures. The release could provide clues about the direction of monetary policy.

Can gold’s recovery withstand the Fed as FOMC and core PCE take focus?

Despite the firmer US Dollar and rising US Treasury yields, OCBC strategists characterise gold’s latest recovery as “somewhat encouraging”, highlighting that it has occurred “particularly given the firmer USD and US Treasury yield upticks.” In their assessment, “a rebound in technology equities may also have helped ease broader liquidation pressures,” although “US Treasury yields remain elevated and markets continue to price a high probability of another Fed hike in December.”

For OCBC, the immediate priority is clear: “focus now shifts to the FOMC, where a hold is widely anticipated, but guidance on path trajectory will matter more.” Against that backdrop, the strategists note that “Thursday’s core PCE could either reinforce or temper the Fed’s message,” while suggesting that “further easing in oil prices, accompanied by softer yields and USD, could help extend gold’s recovery.” Their caution is that “a hawkish Fed or another bout of equity deleveraging could quickly undermine the rebound,” leaving their assessment that “for now, we still see some 2-way risks.”

Does the Fed’s renewed 2% commitment and effective ‘monetary medicine’ keep the Dollar supported?

Support for the Dollar on declines remains consistent with the tone of Warsh’s press conference. His 7/10 FXS Speechtracker reading equals the historical average and fits the established baseline, although the rhetoric is more confidently hawkish. By stressing that “ensuring price stability is not about a fixed date on a calendar” and firmly committing to a 2% PCE target, Warsh signalled a resolute anti-inflation approach that remains dependent on data. Assertions that “new monetary medicine” is working and that inflation expectations are “going the right way,” further argue against an imminent shift towards easing. Mentions of tighter financial conditions, wider credit spreads and broadening capital expenditure support the view that policy is having an effect, but is not yet restrictive enough to claim success.

A 14.39-point rise took the FXS Fed Sentiment Index to 141.89, placing it further into hawkish territory and substantially above the neutral line of 100. The increase confirms that markets interpreted the press conference as showing greater resolve on inflation than previously. Alongside the unchanged 7/10 FXS Speechtracker reading, the elevated index suggests that the Fed’s response to economic conditions remains tilted towards maintaining tight policy for longer. That setting should keep the Dollar supported against lower-yielding peers.

Technical Analysis: Can Gold break above the 100-day SMA?

A bearish near-term bias persists on the daily XAU/USD chart as the correction continues below key moving averages. Following the recent pullback, spot gold remains beneath both the 20-day Bollinger simple moving average and the 100-day simple moving average, indicating that rallies are still constrained within a wider consolidation. At close to 40, the Relative Strength Index (14) indicates continued downward pressure without yet reaching oversold territory. Sellers therefore appear to retain control, with scope for further losses.

The first upside hurdle is the 20-day Bollinger middle band near $4,120. A move through it would bring the 100-day SMA at $4,218 into view, followed by the upper Bollinger band around $4,235, where selling interest could return. Initial downside support lies at the lower Bollinger band of $4,005. A decisive breach would likely strengthen the bearish outlook and pave the way for a deeper fall towards lower psychological and historical levels that are not visible in the current chart configuration.

(The technical analysis of this story was written with the help of an AI tool. Know more.)