$XAUUSD

‌
Gold prices are searching for direction during the quiet period leading up to the Federal Reserve's interest rate decision. After slipping to $4,106 on October 21, the price of an ounce of gold is attempting to hold steady around the $4,114 level. This situation stems from a complex equation involving expectations for the Fed's October meeting, rising bond yields, and various geopolitical developments.

The Federal Reserve is expected to keep interest rates unchanged at its October 27–28 meeting. According to CME FedWatch data, there is an 83.9% probability that rates will remain steady, with only a 16.1% chance of a hike. The market’s primary focus, however, is on the December meeting; there is a strong 76.1% probability priced in for an interest rate hike then. In other words, the market believes the Fed has not yet concluded its tightening cycle, though it expects the process to be carried out gradually.

These expectations have a direct impact on gold. The yield on the 10-year U.S. Treasury note is hovering around 5.12%. High bond yields increase the opportunity cost of holding gold, an asset that does not generate interest. With a risk-free return available elsewhere, investors require a more compelling reason to maintain positions in assets like gold. Consequently, the price is currently hovering near a critical support zone in the $4,100–$4,110 range.

Today’s data calendar will also be a key factor for gold. If the upcoming U.S. crude oil inventory figures show a sharp decline—as has been the case in recent weeks—it could reignite inflation concerns by driving up oil prices. The 20-year bond auction, scheduled for the same day, will provide a significant signal regarding the trajectory of long-term bond yields. These two developments will determine whether gold can maintain its support level at $4,104.

With Federal Reserve officials in a "quiet period" until October 29, the market is focusing more heavily on economic data and geopolitical headlines to find direction. A new diplomatic signal from the Iranian front could rapidly shift risk appetite and reverse the direction of gold. For now, however, the trio of oil prices, interest rates, and the US dollar continues to work against gold. Meanwhile, tensions in the Middle East and uncertainties surrounding energy supplies are keeping demand for gold as a "safe haven" alive, thereby limiting any downward movement.

This text does not constitute investment advice.