Today's Gold Price Analysis: Fed rate cut bets strengthen, maintaining the XAU/USD 4,050 level... Economic indicators will be decisive

Gold Price Direction in Policy Uncertainty

As the Federal Reserve’s interest rate signals remain mixed, spot gold(XAU/USD) has emerged as the focal point of today’s price volatility. In early Monday Asian markets, gold is trading near $4,075 per ounce, maintaining the psychological resistance level of $4,050.

Last week, following remarks by New York Fed President Williams, market sentiment has shifted dramatically. He suggested the possibility of “additional rate cuts within the bounds of price stability,” which was broadly interpreted as a signal of rate cuts by the end of the year. According to CME FedWatch, the probability of a 25bp cut at the December meeting has surged from around 40% last week to approximately 74%, clearly reflecting a change in investor sentiment.

Internal Fed Divisions… “Policy Pivot” Not Yet Confirmed

However, there is no consensus among senior Fed officials. Dallas Fed President Lori Logan and Boston Fed President Susan Collins maintain that “it is appropriate to hold the current policy rate at this stage.” The ongoing conflict between the ‘dovish’ camp and the ‘cautious’ camp within the Fed means that upcoming economic data releases will be a key factor in determining the direction of gold prices.

Today’s Gold Price Movement Depends on September Economic Data

The release of September Producer Price Index (PPI) and retail sales data on Tuesday is likely to reshape market expectations. The general market consensus is a 0.3% month-over-month increase in headline PPI and a 0.4% rise in retail sales.

If these indicators exceed market expectations and become entrenched, hawkish voices arguing “it’s not the right time yet” will gain strength, likely limiting gold gains amid a dollar appreciation trend. Conversely, if inflation figures slow below expectations, Williams’ dovish signals will gain credibility, and gold could rebuild upward momentum based on the $4,050 support level.

The True Value of Gold is Determined by ‘Expected Interest Rates’

Currently, the main factor driving gold prices is less about safe-haven demand and more about investors’ bets on how quickly the Fed will shift to easing policies. The $4,050–$4,100 range is a testing ground for whether these market bets are realistically justified.

Investors monitoring today’s gold prices should closely follow the December rate cut probability trend, while also responding swiftly to upcoming economic data and additional statements from Fed officials with flexibility.