Gold price hangs near one-week low; traders seem reluctant ahead of FOMC meeting

• Gold price enters a bearish consolidation phase near a one-week trough touched on Monday.
• Bets for a less dovish Fed seem to cap the XAU/USD ahead of the FOMC meeting this week.
• Geopolitical tensions, softer US bond yields and USD offer some support to the XAU/USD.

Gold price (XAU/USD) extends its consolidative price move heading into the European session and remains close to a one-week low touched earlier this Monday. Growing acceptance that the Federal Reserve (Fed) will slow the pace of its rate-cutting cycle amid signs that the progress in lowering inflation toward the 2% target has stalled acts as a headwind for the non-yielding yellow metal. That said, a combination of factors offers some support to the commodity.

A modest downtick in the US Treasury bond yields keeps the US Dollar (USD) bulls on the defensive. Adding to this, concerns about US President-elect Donald Trump's policies and persistent geopolitical risks help limit the downside for the Gold price. Traders might also refrain from placing directional bets ahead of the crucial FOMC policy decision on Wednesday, which will be looked for cues about the future rate-cut path and provide a fresh impetus to the bullion. 

Gold price draws some support from safe-haven demand; bets for a less dovish Fed cap the upside

• Israel agreed on plans to allocate state money to expand its presence and double its population in the occupied Golan Heights, raising the risk of a further escalation of tensions in the region. 
• Israeli strikes in Gaza killed at least 53 Palestinians, while the Israeli military said that its air and ground forces in the north of the enclave killed dozens of militants and captured others.
• NATO Secretary General Mark Rutte has warned that Russian President Vladimir Putin wants to wipe Ukraine off the map and could come after other parts of Europe next.
• The Syrian Observatory for Human Rights said that Israeli fighter jets targeted the missile launchers in southern Syria and carried out an air strike on radars in eastern Syria.
• The CME Group's FedWatch Tool indicates that traders are pricing in over a 93% chance that the Federal Reserve will lower borrowing costs by 25 basis points on Wednesday. 
• The US Consumer Price Index (CPI) and the Producer Price Index (PPI) released last week reinforced expectations that the Fed will slow the pace of its rate-cutting cycle next year. 
• The yield on the benchmark 10-year US government bond rose to a three-week high on Friday amid bets for a less dovish Fed, which should cap gains for the non-yielding Gold price. 
• Monday's economic docket features the release of global flash PMIs, which, might influence the broader risk sentiment and provide some impetus to the safe-haven precious metal.
• The focus, however, will be on the crucial FOMC decision on Wednesday. Traders will also take cues from the accompanying policy statement and Fed Chair Jerome Powell's remarks.

Gold price bears need to wait for a break below $2,644-$2,643 support before placing fresh bets

From a technical perspective, the Asian session low, around the $2,644-2,643 area, coincides with a congestion zone. Some follow-through selling has the potential to drag the Gold price to the $2,625 region en route to the monthly low, around the $2,614 zone and the $2,605-2,600 pivotal support. A convincing break below the latter will be seen as a fresh trigger for bearish traders and pave the way for deeper losses.

On the flip side, the $2,665-2,666 region now seems to act as an immediate hurdle ahead of the $2,677 area, above which the Gold price could aim to reclaim the $2,700 round figure. The subsequent move up could extend further towards the monthly swing high, around the $2,726 zone, which if cleared decisively will set the stage for a further near-term appreciating move.