1. Event summary

Dallas Fed President Lorie Logan said on October 2 at the University of Texas at Austin that the Fed’s 0.25 percentage point rate cut in September was an “insurance” move in case the job market weakened sharply. Inflation is still above the 2% target, and tariffs and other pressures could push inflation up in the coming months. She said the Fed must be “very cautious” about more rate cuts to avoid having to reverse policy after easing, which would make getting inflation back under control painful. She expects the path to policy normalization to be slower to make sure inflation returns to 2%.

A US government shutdown prevented the Labor Department from releasing the monthly jobs report on Friday. Other indicators show the labor market is weak but unemployment (4.3% in August) has not jumped. Logan is worried the job market is fragile, especially for recent college graduates, though she has not seen large-scale layoffs. She did not directly discuss how the shutdown affects data, but past talks with local businesses made her more cautious about cuts.

2. Reactions

Logan supported the September cut but warned that tariff uncertainty could make inflation expectations stick, which is risky even if tariff effects are temporary. She said the labor market is cooling gradually and is balanced, but sensitive to shocks.

Market reaction: Logan’s hawkish comments pushed gold down nearly 1% on Thursday from record highs, though overall safe-haven demand stayed intact. Markets still price a 97.8% chance of a rate cut in October, showing continued expectations for Fed easing.

3. Market impact analysis

- Fed hawkishness increases policy uncertainty

Logan’s caution about more cuts widens disagreement over the Fed’s path. With inflation above target and tariff risks, easing might be delayed. That can support the dollar and limit gold gains short term, but uncertainty also pushes investors to buy gold as a hedge against economic swings and rising inflation risk.

- Government shutdown increases data gaps risk

The shutdown delayed the jobs report and, combined with signs of labor weakness, could increase Fed uncertainty. If the shutdown lasts, worries about economic disruption could weaken the dollar’s safe-haven role and lead central banks to buy more gold, creating steady buying.

- Dual risk of inflation and jobs boosts gold’s inflation-hedge role

Tariffs raising inflation expectations and a fragile job market increase stagflation risk. Gold, which pays no income but protects value, benefits especially when the Fed must balance both goals.

4. Technical analysis

At Beijing time 13:33 on October 3, gold was trading in a range, spot gold at $3,856.57 per ounce. Recent support is around $3,845 per ounce and resistance near $3,860 per ounce. The government shutdown and Fed moves will guide the next direction.

5. Outlook

- Fed October meeting

If Logan’s hawkish view influences policy, the October cut may be smaller than expected, raising policy disagreement and pushing up gold’s risk premium. If the shutdown’s data gap raises job risk, easing odds could grow and support gold.

- If the shutdown continues

If the shutdown lasts several days, it could reduce growth by about 0.1–0.2 percentage points per week and delay inflation reports, prolonging uncertainty and boosting medium- to long-term gold demand.

Summary

Logan’s hawkish comments highlight inflation risks and policy caution. Combined with the shutdown delaying data, this raises economic uncertainty and supports gold’s safe-haven demand. Short-term pressure may weigh on gold prices, but structural risks give gold upside. Investors should watch the shutdown progress, the resumption of October jobs data, and Fed meeting developments. Technicals show gold is strong and the premium could continue.