Gold Prices Preserve October Range- FOMC to Fuel the Break

New York (Oct 28)  Gold prices are down for the second consecutive week with the precious metal off by .75% to trade at 1270 ahead of the New York close on Friday. The losses come amid continued strength in the U.S. Dollar with the DXY up more than 1.1% this week. Fueling the gains in the greenback was a sharp sell-off in the Euro after a dovish ECB President Mario Draghi suggested that interest rates would likely remain at present levels for "an extended period of time" after the QE program ends.

Heading into next week, all eyes fall on the Fed with the FOMC rate decision slated for Wednesday. While no change to the benchmark rate is expected, traders will be looking for any changes to the accompanying statement- specifically as it pertains to the inflationary outlook. Keep in mind markets have largely priced in a December hike with Fed Fund Futures currently showing an 87.1% probability for an increase of 25bps. However with both 3Q GDP and the Core Personal Consumption Expenditure (PCE) coming in stronger-than-expected on Friday, the question now becomes the future pace of subsequent rate-hikes. 

For gold, prices are treading into murky territory and while some downside pressure may still be on the cards near-term, the decline starts to look vulnerable heading into next week. On whole, price have continued to trade within the confines of the monthly opening range and we’ll be looking for next week’s event risk to fuel a break.

DailyFX