Gold price bulls become apprehensive ahead of the important FOMC policy meeting on Tuesday.
The gold price (XAUUSD) fell slightly on Tuesday due to profit-taking following the recent increase to an all-time high reached the day before, although the downside remains cushioned.
Bets on a 50 basis point Fed rate drop could put USD bulls on the defensive while providing some assistance.
The US Dollar (USD) has rebounded from its lowest level since July 2023, hit on Monday, amid some repositioning activity ahead of the critical two Federal Open Market Committee (FOMC) policy meetings beginning today. This, , in turn, is viewed as a significant factor dragging on the commodity, however mounting bets for an excessive interest rate decrease by the Federal Reserve (Fed) may continue to function as a tailwind.
China’s economic troubles, political uncertainty in the United States, and geopolitical dangers all contribute to lower losses.
Meanwhile, poor macroeconomic statistics from China revealed over the weekend raised concerns about the world’s second-largest economy slowing down. Apart from that, continued geopolitical dangers, as well as political uncertainty in the United States ahead of the November election, sustain the safe-haven gold price. Furthermore, traders may opt to remain on the sidelines as important central bank event risks emerge, beginning with the Fed decision on Wednesday and continuing with the Bank of England (BoE) and Bank of Japan (BoJ) meetings on Thursday and Friday.
Daily Market Movers: Gold Price traders appear non-committed ahead of the big central bank event risks.
Rising bets on the Federal Reserve’s big interest rate decrease drive the US Dollar to its lowest level since July 2023, while the non-yielding Gold price rises to a new record high on Monday.
According to the CME Group’s FedWatch Tool, markets are presently putting in a more than 60% possibility that the US central bank will cut borrowing prices by 50 basis points on Wednesday.
The yield on the rate-sensitive 2-year US government bond fell to its lowest since September 2022, while the benchmark 10-year US Treasury yield fell to its lowest since June 2023.
New York Empire State Manufacturing Index came in at 11.5 in September, much Better than the -3.9 projected and the -4.7 preceding, but did little to excite USD bulls.
The New York Empire State Manufacturing Index came in at 11.5 in September, much Better than the -3.9 projected and the -4.7 preceding, but did little to excite USD bulls.
A slew of dismal Chinese data released over the weekend pointed to further economic slowdown and difficulty in meeting the official objective of roughly 5% GDP growth in 2024.
Hamas issued a warning that if Israel continues its military strikes and does not reach an agreement, hostages will be sent out in coffins, heightening the prospect of a larger Middle East confrontation.
Furthermore, news of a second failed murder attempt on Republican presidential nominee Donald Trump increase concern and act as a tailwind for the XAU/USD.
Bullish traders, however, take a little break and are now waiting for the outcome of a The FOMC will hold a two-day monetary policy meeting before preparing for the next leg of its directional motion.
The Fed will announce its decision on Wednesday, which will be accompanied by updated economic projections, including the so-called dot-plot, and a news conference following the meeting.
Investors will closely examine Fed Chair Jerome Powell’s speech for clues regarding the rate-cutting path, which will fuel USD demand and provide a new impetus to the commodities.
