Gold price struggles for firm intraday direction, stuck in a range ahead of Fed decision
|- Gold price consolidates in a range as traders keenly await key central bank event risks.
- Bets for a 50 bps Fed rate cut keep a lid on the attempted USD recovery and lend support.
- Traders also seem reluctant to place aggressive bets ahead of the pivotal FOMC decision.
Gold price (XAU/USD) struggles to gain any meaningful traction on Wednesday and consolidates in a range, around the $2,570 area heading into the European session. Traders now seem reluctant and opt to wait for the outcome of the highly-anticipated two-day Federal Open Market Committee (FOMC) meeting before positioning for the next leg of a directional move. Heading into the key central bank event risk, rising bets for a more aggressive policy easing by the Federal Reserve (Fed) keep a lid on the US Dollar (USD) recovery from its lowest level since July 2023 touched on Tuesday. This, in turn, is seen acting as a tailwind for the non-yielding yellow metal.
Apart from this, the risk of a further escalation of geopolitical tensions in the Middle East, along with the US political uncertainty ahead of the November presidential election, might continue to lend support to the Gold price. Investors this week will further take cues from the Bank of England (BoE) decision on Thursday and the Bank of Japan (BoJ) policy update on Friday. This makes it prudent to wait for strong follow-through selling before confirming that the XAU/USD has topped out in the near term and positioning for an extension of the overnight pullback from the vicinity of the all-time peak, around the $2,589-2,590 area touched on the first day of the current week.
Daily Digest Market Movers: Gold price bulls await the crucial Fed decision before placing fresh bets
- Bets for a more aggressive policy easing by the Federal Reserve will assist the gold price in attracting some dip-buyers on Wednesday and stall the overnight modest pullback from the vicinity of the all-time peak.
- According to CME Group's FedWatch Tool, the markets are currently pricing in a 65% chance that the US central bank will lower borrowing costs by 50-basis points at the end of a two-day meeting later today.
- The yield on the benchmark 10-year US government bond bounced from a 16-month low following the release of US Retail Sales data on Tuesday, albeit lacks follow-through and caps the US Dollar recovery.
- The US Census Bureau reported that Retail Sales in the US rose 0.1% in August as compared to a decline of 0.2% expected, while sales excluding Autos missed consensus estimates and expanded by 0.1%.
- The upbeat data prompted some intraday USD short-covering move and pushed it away from the lowest level since July 2023, though the positive move runs out of steam amid dovish Fed expectations.
- At least nine people were killed in simultaneous explosions of handheld pagers used by Hezbollah members in Lebanon, raising the risk of a broader Middle East war and underpinning the safe-haven metal.
- Meanwhile, North Korea, days after offering a view into a facility built to enrich uranium for nuclear bombs, test-fired multiple ballistic missiles toward the South Korean and Japanese eastern seas on Wednesday.
- The market focus remains glued to the critical FOMC policy decision, which, along with updated economic projections, including the so-called 'dot plot', should provide a fresh impetus to the XAU/USD.
Technical Outlook: Gold price technical setup suggests that the path of least resistance is to the upside
From a technical perspective, bulls might now wait for a move beyond the $2,589-2,590 region, or the all-time peak touched on Monday, before placing fresh bets. The subsequent move up has the potential to lift the Gold price above the $2,600 mark, towards testing the top boundary of a short-term ascending channel extending from sub-$2,400 levels touched late June. The said barrier is currently pegged near the $2,609-2,610 area, which if cleared decisively will confirm a fresh breakout and set the stage for an extension of the recent well-established uptrend.
On the flip side, some follow-through selling below the overnight swing low, around the $2,561-2,560 area, could pave the way for deeper losses towards the $2,530-2,525 strong horizontal resistance breakpoint. Any further decline is more likely to attract fresh buyers and remain limited near the $2,500 psychological mark. The latter should act as a key pivotal point, which if broken decisively could drag the Gold price to the $2,475-2,470 confluence – comprising the 50-day Simple Moving Average and the lower boundary of the aforementioned trend channel.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.08% | -0.59% | -0.06% | -0.16% | -0.30% | -0.19% | |
| EUR | 0.04% | -0.05% | -0.57% | -0.02% | -0.10% | -0.27% | -0.17% | |
| GBP | 0.08% | 0.05% | -0.52% | 0.02% | -0.06% | -0.23% | -0.11% | |
| JPY | 0.59% | 0.57% | 0.52% | 0.53% | 0.44% | 0.30% | 0.40% | |
| CAD | 0.06% | 0.02% | -0.02% | -0.53% | -0.10% | -0.25% | -0.13% | |
| AUD | 0.16% | 0.10% | 0.06% | -0.44% | 0.10% | -0.14% | -0.04% | |
| NZD | 0.30% | 0.27% | 0.23% | -0.30% | 0.25% | 0.14% | 0.09% | |
| CHF | 0.19% | 0.17% | 0.11% | -0.40% | 0.13% | 0.04% | -0.09% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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