XAUUSD - Gold awaits a decisive week?!Gold is trading below the EMA200 and EMA50 on the hourly timeframe and is trading in its range. A break below or above this range will lead to a continuation of the trend in the same direction. A correction towards the demand range will provide us with a better risk-reward buying opportunity. And a rise will provide us with the next short position!
After experiencing one of the worst trading sessions for gold in recent years and failing to achieve its tenth consecutive week of gains, many traders, analysts, and retail investors are now wondering where the gold market is headed next.
Mark Leibovit, publisher of the VR Metals/Resource Letter, took a cautious stance, saying:
“At the moment, I prefer not to hold any position in the market. I’m simply observing and waiting to see how conditions unfold.”
With the U.S. federal government shutdown still ongoing, the release of economic data next week is expected to be limited. As a result, market attention will once again shift toward central banks, particularly the Federal Reserve’s upcoming interest rate decision.
On Tuesday, the U.S. Consumer Confidence Index for October will be released. However, the main market movements are expected on Wednesday, when the Bank of Canada’s policy decision and the U.S. pending home sales data will be published — followed by the Federal Reserve’s policy announcement. Later, the Bank of Japan will provide an update on its monetary stance, and finally, the week will conclude with the European Central Bank’s (ECB) policy decision on Thursday, which could also influence the euro’s direction.
It is widely expected that the Federal Open Market Committee (FOMC) will cut its benchmark interest rate by 0.25 percentage points at the conclusion of its two-day meeting on Wednesday.
The Fed aims to lower borrowing costs and support the labor market through this move. Having kept rates elevated for an extended period to combat stubborn inflation, policymakers now view labor market stability as a higher priority, given that recent data show inflation remains persistent but under control.
According to the CME FedWatch Tool, which tracks rate expectations through federal funds futures, the FOMC is likely to reduce the federal funds rate to a range of 3.75%–4.00%, marking a second consecutive rate cut.
While many Fed officials have expressed readiness to ease rates, opinions still differ on the pace and extent of future reductions.
The outlook for upcoming policy actions remains uncertain, as the Fed continues to balance its dual mandate from Congress — containing inflation while maximizing employment.
A rate cut would bring the federal funds rate closer to a neutral level, where it neither stimulates nor restrains economic activity. Although the Fed kept rates high to fight inflation, the recent weakening in the labor market has become a more pressing concern.
Even though inflation remains above the Fed’s 2% annual target, officials are increasingly worried about the health of the labor market, as job creation has nearly stalled in recent months.
By lowering the federal funds rate, the Fed seeks to reduce short-term borrowing costs, encourage lending and investment, and bolster employment.
At the same time, trade tariffs are contributing both to rising prices and slower job growth. These import taxes have created uncertainty among business leaders, discouraging expansion plans and pushing higher costs onto consumers.
The Fed now faces the challenge of making interest rate decisions without access to many key economic reports it typically relies upon. In fact, the September Consumer Price Index (CPI) may be the last major economic data release the central bank receives for some time.
Other crucial government reports — including employment and GDP growth data — have been delayed or suspended due to the ongoing federal government shutdown, and may not be released at all for October.
