Gold Falls as Stronger Dollar Weighs on Prices After Fed Meeting Minutes

Spot gold fell nearly \$15 on Wednesday, as the release of the Federal Reserve's latest meeting minutes prompted market expectations for steady interest rates in November, strengthening the U.S. dollar and putting pressure on gold prices.

Gold closed down \$14.13, or 0.54%, at \$2,607.71 per ounce, with intraday lows reaching \$2,605.16 per ounce. According to FXStreet analyst Christian Borjon Valencia, gold prices have now declined for six consecutive days following the release of the minutes from the Federal Open Market Committee's (FOMC) September meeting. The minutes highlighted divisions within the Fed, as some officials expressed a preference for a smaller rate cut of 25 basis points instead of the 50-basis-point cut that was ultimately approved.

The minutes also indicated that while the Fed approved a more substantial rate cut, it was not intended as a signal of concern over the economic outlook. Inflation remains elevated but recent monthly data suggests a continued decline, with most participants agreeing that inflation is on track to fall back to 2%.

Following the release of the minutes, the likelihood of a 25-basis-point rate cut in November dropped to 75.9% from 85.2% a day earlier, as indicated by the CME's "Fed Watch" tool. Treasury yields also rose, with the 10-year yield climbing to 4.062%, providing additional support for the U.S. dollar, which rose to its highest level since mid-August.

With traders digesting the Fed minutes, focus now shifts to Thursday's U.S. Consumer Price Index (CPI) report. Expectations are for a decline in year-on-year CPI from 2.5% to 2.3% for September, while the core CPI is expected to remain steady at 3.2%. Initial jobless claims data is also set for release, with forecasts indicating an increase to 230,000 claims.

Valencia noted that gold's short-term trend remains bearish as prices slipped below \$2,630 per ounce. If prices fall below \$2,600, they may test the psychological level of \$2,550, followed by the 50-day simple moving average at \$2,537. However, a recovery above \$2,650 could pave the way for a test of \$2,670, with a potential high of \$2,685.