Weak gold signals vs safe-haven demand: Gold price defense at $4,300 ahead of FOMC minutes release

Gold prices are holding around $4,315 in Monday’s Asian session, maintaining technical support levels. The market is receiving mixed signals amid expectations of additional Federal Reserve rate cuts and geopolitical uncertainties. In particular, market attention is focused on the possibility that FOMC minutes and statements from senior Fed officials could trigger short-term downward pressure on gold, which is denominated in dollars.

As demand for safe assets supports gold prices,

Following the Fed’s rate cut of 25 basis points(bp) last week, bringing the benchmark rate to the 3.50%–3.75% range, expectations of further cuts next year are flowing into gold. Since the opportunity cost of holding gold, which yields no interest, decreases during rate cuts, this phase is fundamentally positive for spot gold.

At the same time, geopolitical risks are increasing safe-haven demand. A recent terrorist attack in Sydney, Australia, resulted in 16 deaths and 40 injuries, which has heightened risk-averse sentiment in global markets. As anxiety grows, investors tend to prefer moving funds into low-volatility assets like gold.

Deepening internal disagreements within the Fed: unclear policy direction

Market uncertainty is growing as senior Fed officials openly express differing views on the future direction of interest rate policy. Chicago Fed President Austin Goolsby stated that during the two-month government shutdown, it would have been prudent to wait for more economic data before making rate decisions.

Conversely, Cleveland Fed President Bess Hockett emphasized the need to maintain the current high interest rates to curb inflation. Once the FOMC minutes are released, the internal debate within the Fed is expected to become more transparent, likely prompting a re-evaluation of market expectations.

Weekly variables: employment data and Fed officials’ statements

The October non-farm payrolls report(NFP) due this Tuesday is expected to be a key indicator for the Fed’s next move. Additionally, statements from Fed Board member Stephen Miran and New York Fed President John Williams are events that market participants should watch closely.

If these statements adopt a hawkish tone exceeding market expectations, the dollar could rebound, which would automatically exert downward pressure on gold prices. Currently, gold is defending the $4,300 level, and the future policy signals are likely to determine the short-term direction of gold prices.