Gold price attracts some dip buyers, reversing a portion of the overnight corrective decline.
Gold price (XAUUSD) fell slightly from the previous day’s record high, at $2,589-2,590, and closed in the red for the first time in four days on Tuesday. The downtick was prompted by some profit-taking, albeit without any follow-through as traders chose to wait on the sidelines ahead of this week’s Prior to initiating new directional bets, consider important central bank event risks.
Bets on a 50 basis point Fed rate cut keep a lid on the attempted USD comeback and provide support.
The Federal Reserve (Fed) will publish its decision at the conclusion of a two-day meeting later this Wednesday, followed by the Bank of England’s (BoE) meeting on Thursday and the Bank of Japan’s (BoJ) policy announcement on Friday.
Meanwhile, the Fed’s wide pricing for an enormous interest rate decrease fails to help the US Dollar (USD) capitalise on the overnight rebound from its lowest level since July 2023, reviving demand for the non-yielding Gold price. However, a 25 basis point (bps) rate drop could boost the USD while weighing on the commodities. However, there is a possibility of the confrontation escalating further. The Middle East, combined with US political instability before of the November presidential election, could provide support for the precious metal and limit the downside. This means that any corrective retreat could still be viewed as a purchasing opportunity.
Daily Market Movers: Gold continues to get support from a variety of factors ahead of the Fed.
Bets on a more aggressive policy easing by the Federal Reserve will help the gold price attract some dip buyers on Wednesday, stalling the overnight small drop from around the all-time high.
According to CME Group’s FedWatch Tool, the markets are currently pricing in a 65% possibility of the US central bank lowering borrowing costs by 50 basis points at the end of A two-day summit will begin later today.
The yield on the benchmark 10-year US government bond rose from a 16-month low after the release of US Retail Sales data on Tuesday, but it lacks follow-through and restricts the US Dollar recovery.
The US Census Bureau stated that retail sales in the US grew 0.1% in August, compared to a 0.2% fall projected, while sales excluding autos missed consensus predictions and increased by 0.1%.
The encouraging news triggered some immediate USD short-covering and lifted it away from its lowest level since July 2023, but the positive move faded amid dovish Fed predictions.
Bulls appear hesitant to make strong wagers ahead of the main central bank event risks.
At least nine people died in simultaneous explosions of handheld pagers used by Hezbollah members in Lebanon, escalating the risk of a larger Middle East conflict and supporting the safe-haven metal.
Meanwhile, North Korea tested multiple ballistic missiles toward the eastern seas of South Korea and Japan on Wednesday, only days after providing a tour of a facility designed to enrich uranium for nuclear bombs.
The market’s attention remains focused on the important FOMC policy decision, which, coupled with updated economic estimates, including the so-called ‘dot plot’, should provide a new impetus to the XAUUSD.
