Gold posts solid gains on geopolitical unrest, lower dollar, and dovish Fed minutes

As of 4:20 PM EDT gold futures basis the most active December contract is up $12.20 and is fixed at $1887.50. Gold opened at $1873.70 and traded to a high of $1890.90, and a low of $1871.70. The result of gold opening near the low and closing near its high while posting a solid gain created a large green candlestick.

Gold was supported by multiple factors. The release of last month’s FOMC minutes today indicated that many Federal Reserve members share a cautious stance regarding rate hikes and continued tightening because of the uncertainty about the economic outlook. Analysts and economists are projecting that the release of the latest inflation data, the CPI which will be released tomorrow will indicate that inflationary pressures will continue to decline. This would lessen the pressure on the Federal Reserve to initiate any more interest rate hikes this year.

According to an article in MorningStar, the September CPI forecast will show that inflationary trends are moderating. “The Consumer Price Index report for September 2023 is forecast to show a continued slowdown in inflation growth, led in part by further declines in used car prices. This continues the reversal of a trend that helped fuel the post-pandemic inflation surge … analysts will be watching September’s report - due to be released Thursday at 8:30 a.m. Eastern time - closely for improvement in core inflation, which excludes volatile food and energy prices.”

Reuters News reported that “Thursday's consumer price data is expected to show that headline inflation slowed to 0.3% in September, from 0.6% in August, for an annual increase of 3.6%, down from 3.7% the prior month.”

Lastly gold continues to rise now for the third consecutive day as the direct result of safe haven buying following the Hamas terrorist attack on Israel Saturday. The attack resulted in a declaration of war by Israel and ongoing military operations including military strikes in Gaza.

This conflict appears to be far from over and continues to have major ripples and implications throughout the financial markets. Most assuredly this war will continue to have an impact on both crude oil and gold prices causing both to rise.

Wishing you as always good trading,