On October 14, London spot gold edged lower overnight, while COMEX gold futures slipped 0.15%, as investors held back ahead of a highly anticipated U.S. inflation report.
On the macroeconomic front, New York Fed President Williams said another rate hike might still be possible this year, though there would be no need for further increases in 2027; Fed Governor Waller noted that rising long-term Treasury yields are curbing demand in rate-sensitive sectors such as housing and autos, effectively tightening monetary policy to some degree.
Tonight's U.S. CPI data will shape future rate-hike expectations.
Markets currently see a low probability of an increase at the Fed's October 28 meeting, but a rise in core CPI to 0.3% month-over-month could reignite concerns about tightening.
Before this major data release, capital remains cautious, and short-term gold prices are holding in a low-range consolidation.
The IMF's latest World Economic Outlook shows that advanced economies' net borrowing will reach 5.2% of GDP this year, the highest since 2021; U.S. general government net borrowing is set to hit 8.5% of GDP, up from 7.1% in 2025 and worse than the April assessment.
Geopolitically, on October 13, Trump said he had spoken with the Saudi crown prince, but declined to say whether he had decided to join strikes against the Houthis, and accused the Houthis of deliberately driving up oil prices ahead of the U.S. midterm elections.
Gold prices continue to fluctuate at low levels, likely tied to U.S. long-term Treasury yields staying elevated.
For the market, two contradictions exist: on one hand, there are concerns about runaway long-term Treasury yields; on the other, this boosts the appeal of dollar-denominated assets.
Overall, expectations of weakening U.S. economic data limit the short-term downside for precious metals, but elevated long-end rates or rate-hike expectations, combined with a strong dollar, still impose valuation constraints, warranting a cautious view.
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