Gold price falls from a two week high reached on Tuesday, despite moderate USD strength.
The gold price (XAUUSD) is under selling pressure following an overnight fall from a two week high around $2,048-2,049. And remains down heading into the European session on Wednesday. Investors lowered their expectations for an early interest rate cut. By the Federal Reserve (Fed) after the JOLTS report released on Tuesday. Indicated underlying resilience in the US labor market. This helps to restore US Dollar (USD) demand and turns out to be a significant element imposing downward pressure on the precious metal.
However, the recent decrease in US Treasury bond yields may prevent USD bulls from making aggressive wagers. Due to uncertainties about when the Fed would begin decreasing interest rates. As a result, the focus remains on the results of the much-anticipated FOMC monetary policy meeting. Which is set to be released later today.
Geopolitical uncertainties and China’s economic troubles may provide some support for the safe-haven metal.
Meanwhile, continued geopolitical tensions resulting from Middle Eastern conflicts. Combined with concerns about slowing Chinese economic growth, could limit further losses for the safe-haven gold price.
Daily Market Movers: Gold price is under pressure from renewed USD purchasing ahead The FOMC
The US dollar regains positive traction as the possibilities of a more aggressive policy. Easing by the Federal Reserve fade, dragging the gold price away from a two-week high reached the day before.
According to the Bureau of Labor Statistics’ Job opportunities and Labor Turnover Survey (JOLTS). There were 9.02 million job opportunities in the United States in December, an unexpected increase.
The Conference Board’s US Consumer Confidence Index rose to its highest level since December 2021, 114.8 in January, up from 108.0 the previous month.
Furthermore, the International Monetary Fund raised its prediction. For US economic growth to 2.1% in 2024. Up from 1.5% in October, before easing to 1.7%.This suggests that the US economy is still in good enough form for the Fed to begin decreasing interest rates in the first quarter. Which acts as a tailwind for the dollar and weighs on the metal.
The yield on the benchmark 10-year US government bond remains near 4.0%. Which, combined with geopolitical worries and China’s economic troubles, supports the XAUUSD.
China’s National Bureau of Statistics stated that the official Manufacturing PMI rose marginally to 49.2 in January, but remained in contraction zone for the fourth consecutive month.
This indicates a weak domestic recovery and poor external demand, which, to a greater extent, was countered by a further rise in the Non-Manufacturing PMI to 50.7 in January from the 50.4 prior.
Traders may elect to remain on the sidelines ahead of the critical FOMC policy decision.
Investors are now looking to the highly anticipated FOMC policy decision for clues about the first interest rate decrease, which would provide a new boost to the non-yielding yellow metal.
Traders will face the release of the ADP data on private-sector jobs and the Chicago PMI later in the North American session, both of which are important central bank event risks.
