gold prices continue to experience limited movement, remaining entrenched within a narrow trading range. Anticipation of a less dovish Federal Reserve and rising US bond yields are contributing to capping the appeal of the non-yielding yellow metal. Meanwhile, ongoing geopolitical tensions are providing some support to gold as investors prepare for the impending FOMC meeting.
On Tuesday, gold prices showed a slight uptick during the Asian trading session but still hovered near a one-week low established the previous day. Market participants appear hesitant, choosing to hold off on making new bets until after the two-day FOMC meeting concludes. The upcoming policy statement, particularly the dot plot and the subsequent remarks from the Federal Reserve Chair, will be closely scrutinized for indications regarding future rate adjustments, which could significantly influence the US dollar and gold prices.
As investors brace for this crucial event, the current geopolitical climate, characterized by concerns surrounding various international conflicts, continues to lend support to the price of gold . Additionally, expectations for a less dovish Fed, compounded by speculation about rising government borrowing due to proposed economic policies, create an environment that fosters higher US Treasury yields. This backdrop may limit gold ’s upside potential while highlighting the need for cautious trading ahead of potential market shifts.
Recent economic data has shown considerable strength in various sectors of the US economy, with key indicators reflecting the quickest expansion seen in over three years. Positive readings from the S&P Global Services PMI overshadowed a dip in manufacturing metrics, reinforcing beliefs that the Fed may adopt a more cautious stance moving forward. Treasury yields saw some upward pressure, reinforcing the idea that inflation expectations could influence the Fed’s decisions.
Moreover, new sanctions from the US targeting North Korea and Russia add another layer of complexity to the market dynamics. Investors are also looking ahead to key retail sales figures due later, but the primary focus remains on the anticipated outcomes from the FOMC meeting.
From a technical perspective, should gold prices dip below recent lows, it may open the door for more bearish sentiment. Support levels are identified at critical price points, while resistance remains evident at slightly higher levels. A sustained move past certain thresholds could indicate a shift in momentum, potentially directing gold prices toward higher trajectories if bullish trends take hold.
