Gold Forecast and News

In a conversation with International Monetary Fund (IMF) Managing Director Kristalina Georgieva, Warsh said that the Fed has made it clear that it will deliver price stability and that he doesn't believe in prejudging meetings. This, along with the recent sharp decline in US bond yields, weighs on the USD and acts as a tailwind for the non-yielding precious metal.

Warsh flags investment surge and AI risks as Fed keeps options open into year-end

Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 established baseline, pointing to a slightly less impactful but still broadly consistent tone. The admission of being “over-scarred from the global financial crisis” underscores a cautious bias even as Warsh highlights structural growth and an investment surge driven by “good policies,” suggesting a guarded hawkish stance that resists pre-committing on October and December decisions. Warsh’s focus on AI as a near-term demand-side force and a tool to strengthen data confidence, alongside attention to negative tailside risks, reinforces a risk-aware policy framework rather than a clear directional shift.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a level of 127.51, leaving the overall stance firmly in hawkish territory. The steady index reading, combined with a slightly softer FXS Speechtracker score, indicates that while the speech did not escalate hawkish expectations, it maintained a robustly restrictive policy bias that should keep Dollar support intact.

Nevertheless, the energy-driven acceleration in US inflation keeps bets for an imminent Fed rate hike by the year-end firmly on the table. On Wednesday, the US Bureau of Labor Statistics (BLS) reported a broad increase in consumer prices in September as the US-Israeli war with Iran kept oil prices elevated. Moreover, the US Producer Price Index (PPI), published on Thursday, advanced 1.3% last month, marking the largest gain since March 2022, and the yearly rate soared to 6.3%. Excluding the ​volatile food and energy components, the core PPI climbed 0.7% and 5% on a monthly and yearly basis, respectively. The suggests that inflation is broadening out beyond energy products and underpin prospects for further Fed tightening. According to the CME Group's FedWatch Tool, traders are assigning over a 90% chance that the US central bank will raise borrowing costs again at its December policy meeting.

This, along with escalating tensions in the Middle East, helps limit losses for the safe-haven USD, capping gains for the Gold. In the latest developments, the Iran-backed Houthi group carried out a deadly missile attack targeting the presidential palace, the seat of Yemen's Saudi-backed and internationally recognised government in the southern city of Aden. Adding to this, French Foreign Minister Pascal Confavreux confirmed that France has started deploying its military assets in Saudi Arabia. Adding to this, the US military developed strike plans that include 'mother of all bombs' against Iranian energy infrastructure and nuclear sites. This raises the risk of a further escalation of tensions in the Middle East, which might continue to support the USD and keep a lid on the commodity.